Facebook’s stablecoin entity, the Diem Association, is relocating from Switzerland to the US, buoyed by the evolving regulatory landscape of the country.
The Diem Association, the entity handling Facebook’s stablecoin project, has announced a partnership with its subsidiary Diem Networks U.S. and Silvergate Capital Corporation. As a result of the partnership, Silvergate Bank will become the exclusive issuer of the Diem USD stablecoin, and the Diem Association will also move to the U.S. from Switzerland.
The Diem Association is building Facebook’s much-critiqued basket of stablecoins that both the crypto industry and incumbent authorities and institutions are skeptical of. The association runs a permissioned blockchain-based payments system, which allows real-time transfer of the stablecoins. The press release notes that the partnership is an important early step for a Diem USD pilot program.
Stuart Levey, chief executive officer of Diem, said of the partnership,
“Silvergate is a leader in financial innovation and an ideal partner for Diem as we move forward with a blockchain-based payment system that protects consumers and enhances the integrity of the financial system…We look forward to working with Silvergate to realize this shared vision.”
The move from Switzerland to the United States is consistent with “Diem’s initial strategic focus” on the U.S. and is reflective of the changing regulatory environment in the country. A consequence of this is that Diem will withdraw its application for a payments license system from Swiss authorities.
Facebook’s Diem comes out of the shadows
For a long time, the Diem project had gone quiet, and not much was known about how it was developing. The project received a great deal of criticism when it was first announced, and soon after received even more from government figures across the world. It is now preparing for its first pilot.
The fear was that Facebook would be gaining too much control, to the point where it could threaten currency sovereignty. The backlash meant that the company had to redesign its system, which it duly did, besides rebranding it to Diem from Libra.
Diem has 26 members that include merchants, payment service providers, social impact partners, and other entities. It lost a few prominent members when the whole effort began receiving criticism, but it has since steadily moved on.