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From an ambitious idea for a single global digital currency to a painful end

Throughout its relatively short history, Facebook’s digital asset project Diem (initially known as Libra) managed to capture the attention of the cryptocurrency community and, perhaps more importantly, global regulators. Over the years, it changed its concept, mission and core idea several times, while watchdogs claimed it works against financial sovereignty and monetary stability. In addition, there were concerns about the lack of privacy, given Facebook’s history. Despite the various transitions the project went through to remain relevant, the group behind Diem eventually had to sell its intellectual property and technology assets to US financial institution Silvergate Bank. For example, Zuckerberg’s idea of ​​launching a single global digital currency backfired rather painfully. The Birth of Libra It all started in June 2019 when Morgan Beller, David Marcus and Kevin Weil created Libra – a digital asset project backed by Facebook. Initially, the intention was to issue a stablecoin as the team behind it hoped it could grow into a global payment method. The initiative was received with mixed feelings from the crypto community. Being backed by arguably the biggest social media company attracted a lot of attention, but not always in a positive way. While some believed in the project, the majority doubted whether such an ambitious idea would ever see the light of day. Nevertheless, many companies from the traditional finance space initially supported the idea of ​​Facebook. Some of those names include PayPal, eBay, Visa, Mastercard, Booking Holdings, and more. At one point, even the Bank of England (known as a staunch opponent of the cryptocurrency universe) claimed that “Libra has the potential to become a systematically important payment system.” In September 2019, Mark Zuckerberg (co-founder and CEO of Meta/Facebook) assured that the stablecoin would not be released without approval from US watchdogs. Shortly after his announcement, financial watchdogs from France, Germany and other G20 countries rose up against Libra, saying the currency poses significant risks to investors and could be used for money laundering. The former president of the United States – Donald Trump – also expressed his concerns about the project. A passionate supporter of the US dollar, he believed that Libra could harm the US’ “one true currency”. As a result, numerous partners started leaving the project as PayPal was the first company to leave. In addition, legal issues even arose when an insurance company that went by the name Libra claimed ownership of the Libra trademark. These were some of the early signs that the project might not work as intended. From Libra to Diem Despite the criticism, Zuckerberg continued to support the idea. He even defended it in a Congressional hearing, but saw little to no success, and the project remained a thorn in the side of the watchdogs. To move away from the original concept, in December 2020 the team changed the name from Libra to Diem (the Latin word for ‘day’). At the time, Stuart Levey – CEO of the Geneva-based Diem Association – confirmed that the change comes as a direct result of the regulatory hurdles. He added that “the original name was related to an early draft of the project that was hard to receive.” Levey further revealed that the Diem currency would use a signal dollar-backed token. Last year, several developments hinted that the asset could finally see the light of day. In April 2021, the team behind it announced it would roll out its stablecoin by the end of the year without specifying an exact date. A month later, the Diem Association joined forces with US crypto-friendly bank Silvergate Bank. Both sides planned to launch a stablecoin pegged to the US dollar. The former also moved from Switzerland to the United States, which was seen as a step in the right direction for the regulation. In August, Diem Association board member David Marcus announced that the blockchain project had solved the problems with US regulators as it had obtained licenses in almost all states. Unlike Donald Trump, he believed that the existence of such a stablecoin could benefit those who lack financial services and help the US maintain the power of the dollar as a world reserve currency. Diem’s ​​demise Despite all the promises and adjustments, months passed with little to no information coming out of the project, except for one more worrying sign. In early December 2021, David Marcus, the head of the project, said he will be leaving at the end of the year. This led to much speculation about Diem’s ​​future. This time around, though, it wasn’t about when it will launch, but more about whether it will ever happen. What many considered inevitable at this point happened in January 2022 when Meta’s (renamed from Facebook) crypto project revealed that it was considering selling its assets to return capital to its investors. Diem also talked to investment bankers about how best to sell his intellectual property and help developers find new workplaces. Aside from Meta, which owned the majority of the company’s stake (about 30%), some of the other prominent members of the association were Andreessen Horowitz, Ribbit Capital, Union Square Ventures and Temasek Holdings Pte. Shortly after initial reports, Silvergate Capital Corporation acquired the intellectual property and other technology assets related to the Diem Association for more than $180 million. This happened less than a year after the US financial institution backed Meta’s project. Alan Lane – CEO of Silvergate said: “We are grateful to Diem and the community of engineers and developers who created this technology and developed it into its current evolution. Silvergate is committed to continuing to nurture the open source community that underpins the technology, and we believe existing contributors will be excited about our vision for the future.” In the aftermath, Diem (made as Libra) went from enthusiasm to criticism, from excitement to regulatory backlash, from high hopes to transform the monetary network to a quiet end. And it all happened in two and a half years. SPECIAL OFFER (Sponsored) Binance Free $100 (Exclusive): Use this link to register and get $100 Free and 10% Off Fees on Binance Futures First Month (Terms and Conditions). PrimeXBT Special Offer: Use this link to register and enter POTATO50 code to get 25% off trading fees.
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