The Diem Association sold the intellectual property of Diem Payment Network to Silvergate Capital Corporation, according to a Monday announcement by the CEO of Diem.
The Meta-backed cryptocurrency project partnered with Silvergate in May 2021 to launch a US dollar-pegged digital currency. The Diem project, formerly known as Libra, will start operating back “over the coming weeks” after Mark Zuckerberg officially gave up on the stablecoin. The project was meant to create a digital coin with more convenience and speed than other cryptocurrencies, without their volatility.
“From the outset, the Diem project has been focused on leveraging the benefits of blockchain technology to design a better and more inclusive payment system. The members of the Diem Association and our outstanding team pursued this vision with determination and perseverance, motivated by the desire to deliver substantial benefits to consumers and businesses, along with a payments solution for those who are currently underserved or excluded altogether from the traditional financial system.”
Diem CEO Stuart Levey said in an official announcement.
Why stop?
After the U.S. Federal Reserve (FED) stopped Meta from going forward with the crypto project, Silvergate will officially acquire the intellectual property and other assets of the Diem Association for $182 million. “As part of integrating the acquired assets into Silvergate’s existing technology, Silvergate expects to incur approximately $30 million of additional costs in 2022,” the company officially announced on Jan 31.
Many of the top companies including Mastercard, PayPal, Visa, etc. have backed Meta, formerly Facebook, since starting the Libra project in 2019. The company faced resistance from the FED to stop risks including “destabilizing runs, disruptions in the payment system, and concentration of economic power,” Bloomberg reported.
Meta started by allowing users to send and receive payments on WhatsApp through the Novi Wallet which made the financial watchdogs start investigating the wallet. Moreover, the US and EU regulators have always seen stablecoins as a threat to national fiat currencies.
Furthermore, CEO Levey believes that Silvergate can revive the stablecoin project. “We 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. With today’s sale, Silvergate will be well-placed to take this vision forward. 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,” he said.
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