Meta Says Adios to Diem – But Its Buyer Wants to Launch a Token of its Own

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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June 25, 2023

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Meta, the company formerly known as Facebook, is set to wash its hands of its ill-fated Diem stablecoin plans once and for all – but there may yet be a twist in the tale as the firm that will buy the coin’s assets and intellectual property (IP) could yet launch a token of its own.

Silvergate Capital, a banking firm with digital asset interests and a sometime Diem partner confirmed to CNBC that it intends to launch a stablecoin by the end of this year.

In an announcement posted on its website, the Diem Foundation, essentially Meta and its partners on the project, “announced the sale of its IP and other assets related to the running of the Diem payment network” to Silvergate. 

Silvergate also confirmed the deal, and its CEO Alan Lane, appeared overjoyed with the deal, remarking to the media outlet that they “think the potential worth is off the charts when we think about using the blockchain technology for payments and remittance.”

Lane also added:

“We were working last year with Diem and we got to know the team very well, and we couldn’t be more excited to essentially be taking the reigns and bringing a stablecoin to market hopefully later this year.”

Lane called the Meta/Facebook engineers who had developed Diem “over the last couple years” a group of “truly world-class engineers.”

And the Silvergate boss claimed that the Diem project – under its new guise and leadership – might finally do what stablecoin issuers have been hoping to do since the tokens’ outset: namely find a niche in the payments world. Until recently, stablecoins have mainly been used as a gateway for crypto trading.

Lane agreed that existing stablecoins “are primarily used for cryptocurrency trading,” but spoke about creating a stablecoin “that could be used by folks” to “pay for things.”

He explained:

“It’s kind of the original promise of bitcoin (BTC). But folks don’t want to be spending their bitcoin with all that volatility. The blockchain technology is here, and we think that’s what a Silvergate-issued stablecoin can provide.”

The Diem Foundation, meanwhile, gave its blessing to Silvergate’s efforts, with its CEO Stuart Levey saying that they 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.

As for its own operations – the Diem partners – appear content to fade away quietly into the background, concluding: 

“Over the coming weeks, the Diem Association and its subsidiaries expect to begin the process of winding down, but we look forward to seeing the design choices – and the ideals – of Diem thrive.”

Last month, Cryptonews.com reported that Meta, which allegedly owns a third of the Diem project, was looking to offload its assets to pay back investors. Diem also reportedly wanted to help the engineers who developed the project find new employment – possibly at Silvergate, although this has not been confirmed. A sale price of USD 200m has also been reported by outlets such as The Wall Street Journal.
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