Facebook’s stablecoin project Diem is up for sale, according to sources

2022-07-21 0 By

Cryptocurrency project Diem Association plans to sell assets in order to return capital to investors, according to a source familiar with the matter.Diem Association was originally Libra, a currency supported by the Meta Platform.They are reportedly in talks with investment banks to figure out the best way to sell their intellectual property and place the engineers involved, ultimately monetizing the once ambitious cryptocurrency project.In 2019, when Meta’s Facebook first revealed it wanted to revolutionize global financial services with a staboin project, it forged partnerships with dozens of companies.But such a powerful alliance is still insufficient to shield the project from regulatory scrutiny around the world.When Zuckerberg testified before Congress, some partners pulled out, and even the project was renamed Diem.Diem’s ambitions were scaled back dramatically, and its founder, David Marcus, left Meta last year.Diem Association struck a deal with Silvergate Capital, but resistance from the Federal Reserve dealt it the final blow, according to people familiar with the matter.Diem said in May last year that an entity called Silvergate Bank would be responsible for issuing Diem dollar staboins, a cryptocurrency that would be pegged to the U.S. dollar.After a long tug-of-war between Diem supporters and regulators, Fed officials finally told Silvergate last summer that they were uncomfortable with the plan and could not be sure it would be allowed, according to people familiar with the matter.Silvergate cannot issue new assets without the Fed’s approval, and fears the Fed could crack down and make Diem’s efforts fruitless.A Fed spokesman declined to comment.The Diem Association also declined to comment.Meta has yet to comment.It is unclear how potential buyers would value Diem’s intellectual property or the engineers involved.People familiar with the matter said discussions were at an early stage and there was no guarantee Diem would find a buyer.Meta owns about a third of Diem, with the rest owned by alliance members, which include venture capital firms and technology companies, according to people familiar with the matter.People familiar with the matter said the members had agreed to join the alliance by investing and paying fees when it was formed.It is unclear who, besides Meta, ultimately invested in the project.According to Diem’s website, its partners include venture Capital firms Andreessen Horowitz, Union Capital, Ribbit Capital, Thrive Capital and Temasek Holdings, Singapore’s state investment agency.Its website also lists companies focused on the cryptocurrency industry, such as Coinbase Global, as well as ride-hailing company Uber and e-commerce platform Shopify.In November, federal regulators finally clarified the scope of the rules.The report by the President’s Task Force on Financial Markets says that if a stablesoin is used to buy and sell payment instruments, its issuer should be regulated as a bank.The task force’s regulators said they were concerned about the potential adverse effects if a large user base for a tech company suddenly began trading in a new currency, and that combining staboin issuers with large companies “could lead to an excessive concentration of economic power.”