Diem Association, the Meta Platforms-led startup looking to launch a new stablecoin designed for everyday use, is set to sell its technology to Silvergate Capital for $200 million, according to reports quoting unnamed sources, The Wall Street Journal reported.
According to the original vision of the Libra project, the stablecoin would be backed by a basket of fiat currencies, which would be able to be traded internationally in a standardized way. This resulted in immediate international regulatory backlash, with lawmakers urging them to put a halt to all development until they could provide some guidance and make sure that there was no threat to financial stability as a result.
Diem, the newly rebranded Libra Association, was launched in December 2020, in an attempt to adopt a more industry-specific approach, but continued to be plagued by challenges, including executive departures.
Last year, the California-based bank, which provides services to blockchain companies, formed a partnership with the Diem Foundation to launch a U.S. dollar-linked stablecoin. A deal between Meta Platforms and Facebook was supposed to breathe new life into a struggling project, which Meta Platforms had begun back in 2019 when Facebook was still called Facebook.
Bloomberg reported on Tuesday that Diem had been in discussions with investment bankers in regards to selling its intellectual property in order to return funds to investors. The report cited unnamed sources.
Silvergate will be the formal issuer and manager of the diem USD stablecoin and manage the reserve it is backed by. Diem Networks U.S. was formed under the association to operate the Diem Payments Network, register as a money services business with the Financial Crimes Enforcement Network (FinCEN), and deal with regulatory concerns. There were however concerns expressed by the Federal Reserve about this plan and it was not guaranteed that it would be approved.
In addition, lawmakers fought back against Novi (formerly Calibra), a Meta subsidiary setting out to build a wallet that would be compatible with Diem, recently announced a pilot program in partnership with Paxos last October.
