Facebook’s Diem To Sell Its Technology To Silvergate Capital For $200M
The Diem Association is selling its technology to a small California bank that serves bitcoin and blockchain companies for about $200 million, according to sources.
According to a report from The Wall Street Journal, The Diem Association, the ex-Facebook-now-Meta-Platforms-initiated enterprise that was established to issue a new, user friendly stablecoin, is selling its technology to Silvergate Capital for $200 million.
Silvergate Capital had already agreed last year to partner with Diem in launching a U.S. dollar-pegged stablecoin. The agreement was supposed to bring new life to a struggling project, which Meta Platforms had initiated under the name Libra back in 2019 when the company was still called Facebook.
Diem was in discussions with investment bankers to sell its intellectual property to return money to investors, according to Bloomberg report earlier this week.
The project originally envisioned a stablecoin backed by a basket of fiat currencies that could be used worldwide as a means of exchange. It immediately was faced with international regulatory backlash, with lawmakers demanding that all development cease until they could provide some regulatory guidance and ensure that it didn’t threaten the global financial stability.
Libra Association was rebranded as Diem in December 2020, to try a different approach, but the initiative continued facing headwinds, including the departure of key executives.
Diem Networks U.S., a unit of the association, would run the Diem Payments Network and register as a money services business with the Financial Crimes Enforcement Network (FinCEN), while Silvergate would be the formal issuer of the diem USD stablecoin and manage the reserve backing the token.
However, the Federal Reserve expressed concerns about this plan and wouldn’t guarantee that it would give its approval. Lawmakers also positioned against Novi (formerly Calibra), a Meta subsidiary focused on building a wallet that would be compatible with Diem, announced a pilot program in partnership with Paxos last autumn.
