Meta is reportedly looking to sell its Diem stablecoin project, sources told Bloomberg. The company wants to use the funds to return capital to investors and resettle the engineers who worked on the project.
Meta’s Diem stablecoin project appears to be taking a hit as Bloomberg reports that the company is attempting to sell its assets. Sources close to the outlet said the stablecoin plans had fallen through, partially because of the concerns that regulators have shown over the project.
Diem folding under regulatory pressure
The sale of assets would go towards returning capital to investor members, the report says. Diem is reportedly talking to investment bankers about how to sell both the intellectual property and finding positions for the engineers on the project.
The stablecoin has had a controversial history, undergoing close scrutiny from regulators and executing a rebranding from the original name of Libra. The most recent of these examinations resulted in Democratic senators in the U.S. asking the company to discontinue the project and the Novi wallet.
The Novi wallet allowed users on WhatsApp to send payments to others. This immediately attracted the attention of U.S. authorities. Finance watchdogs then recommended that regulators investigate the Novi wallet.
Diem caused shockwaves when it was first announced, and both the crypto community and lawmakers across the world expressed criticism. The latter group believed that a basket of stablecoins would give the company too much influence and impinge on the remit of national currencies.
Stablecoins a top priority for regulators
Regulators are turning their focus to stablecoins now, and the next 12 months should see regulation come in some form or the other. Reports suggest that the Biden administration will introduce regulation for the crypto space via executive order; this could include statements on stablecoins.
Stablecoins are seen as a threat to national currencies, and regulators at least want them to register under banking laws if they are going to function as typical currencies. International organizations like the G20 feel the same way.
U.S. and EU regulators discussed stablecoins and CBDCs last year, and there has been a lot of progress with respect to the latter. The U.S. Federal Reserve published a paper last week on a potential CBDC, asking for further dialogue.