Regulatory Woes Forces Facebook to Sell Diem Stablecoin Project to Silvergate

After years of regulatory pushbacks, Meta’s (Facebook) stablecoin project, Diem, has been shut down. Diem Association announced that it’s selling all associated assets to Silvergate for $200 million. 

Meta (Facebook) Sells Diem to Silvergate

The crypto-focused bank also partnered with the group on the project. Notably, the Diem Association had denied reports that it was looking to shut the operations of the organization.

According to the Association, the decision to sell comes after dialogue with federal regulators showed that the project couldn’t progress. The Stablecoin project, which started as Libra, was doomed to fail due to affiliations with the social media giant.

Diem Kept Attracting Regulatory Attention

When Meta announced that it was launching a stablecoin that people could use on its apps, many immediately kicked against the idea. 

The fear was that the tech company which already exerted so much influence would become more powerful when it could issue its own money.  

Although Facebook partnered with other companies to establish the Libra Association for the governance of the token, regulators and the general public remained unconvinced. 

The rebranding to Diem didn’t appear to affect the general opinion about that token. Instead, some founding members of the association started leaving.

Two years down the line, the idea of a stablecoin, which was novel at that time, has become quite popular. With Meta no longer connected to Diem, it’s possible that Silvergate could relaunch the project. 

When compared to most stablecoins today, Diem’s design is believed to be more regulator-friendly and transparent.

When the news of the sale broke, David Marcus, who was responsible for the Libra idea congratulated Silvergate and expressed his disappointment at how regulators and politicians alike worked against the project.

Meta’s Crypto Drive Continues

For Meta, there are other plans already in place. The company is piloting Novi digital wallet for its messaging app, WhatsApp. 

Apart from this, the social media giant recently filed a trademark registration with authorities in Brazil to be able to design and develop hardware and software solutions for Bitcoin and other crypto-related services.

Interestingly, the firm changed its name to Meta towards the end of last year in its effort to better align with its Metaverse aspirations. This move played a part in the increased interest in metaverse and NFTs from traditional firms.