Diem, Meta’s stablecoin project, officially shuts down

Meta, formerly Facebook, has announced the official closure of its stablecoin project “Diem”. Diem CEO, Stuart Levey, unveiled this news on January 31, noting that it had sold its intellectual property and other assets related to the operation of the Diem Payment Network. Reportedly, Diem sold the property to Silvergate Capital Corporation.

Explaining why the project decided to throw in the towel, Levey cited regulatory challenges, saying Diem sought feedback while building the Diem network and created a system that addresses multiple concerns, including anonymity, which poses risks like sanctions and money laundering.

While Levey claims a senior US regulator told the Diem Association that Diem was one of the best-designed stablecoin projects it had seen, this was not enough. He noted that further discussions with federal regulators made it clear that the project had hit a brick wall. To this end, the project found that the best way forward was selling its assets.

According to Levey, the Diem Association and its subsidiaries will start winding down operations in the coming weeks. While this will be the end of the project, Levey said he is confident Diem’s ideals will continue thriving even after Meta pulled out of the project.

He further noted,

We remain confident in the potential for a stablecoin operating on a blockchain designed like Diem’s to deliver the benefits that motivated the Diem Association from the beginning. With today’s sale, Silvergate will be well-placed to take this vision forward.

A $182 million deal

In a separate news release, Silvergate Capital announced that it purchased the Diem network to help better its platform and enhance its existing stablecoin infrastructure. The company added that it is uniquely positioned to use Diem’s technology to bolster its position as a leader in the digital currency industry.

According to Silvergate CEO Alan Lane, this move aligns with the company’s plans of rolling out a stablecoin this year. He pointed out that Silvergate identified the need for a scalable and regulated US dollar-backed stablecoin among its customers. Through this acquisition, the company believes it can keep its promise to launch a stablecoin that allows users to move money seamlessly.

Lane added,

We are grateful to Diem and the community of engineers and developers who created this technology and have advanced it to its current evolution. Silvergate is committed to continuing to foster the open-source community that supports the technology, and we believe that existing contributors will be excited about our vision going forward.

Revealing the agreement’s details, Silvergate Capital said it issued 1,221,217 shares of its class A common stock (SI) to Diem and paid $50.00 million (£37.04 million) in cash. Based on SI’s closing price of around $107.74 (£79.82) on January 31, the aggregate value of the deal was $182.00 million (£134.84 million).

The post Diem, Meta’s stablecoin project, officially shuts down appeared first on Invezz.