Meta, formerly known as Facebook, was expecting to launch its cryptocurrency early this summer, now, that’s not going to happen. Facebook previously placed its hopes on Libra to be its stablecoin, and again, that’s not going to happen.
Facebook created a subsidiary and an association, both of which were supposed to help Libra distance itself from Facebook. But Libra saw strong opposition from governments immediately. This then forced Facebook to postpone the launch of Libra and eventually rebrand it. Now here we are January 2022, and Facebook’s Diem cryptocurrency stablecoin is now in the history books.
The next time we see the Diem stablecoin show up, it won’t have anything to do with the social media giant. However, that doesn’t mean Facebook has given up on plans to incorporate cryptocurrencies into its products.
Diem CE Stuart Levey issued a statement on Monday detailing the sale of the Diem cryptocurrency. The Diem Association sold everything related to the Diem Payment Network to Silvergate Capital Corporation. The reported price is around $200 million.
The exec acknowledged in the press release that the Diem cryptocurrency would have had no future under Facebook:
Despite giving us positive substantive feedback on the design of the network, it nevertheless became clear from our dialogue with federal regulators that the project could not move ahead. As a result, the best path forward was to sell the Diem Group’s assets, as we have done today to Silvergate.
Levey praised the Diem cryptocurrency in the announcement, hinting that the Diem technology might have a future in the crypto market.
One of our highest priorities in designing the Diem Payment Network was building in controls to protect it against misuse by illicit actors. We addressed that concern in ways that are novel in the industry, implementing numerous controls that were recognized as innovative by regulators. Among these controls was a prohibition on anonymous transactions, which pose both a sanctions and money laundering risk.
As we undertook this effort, we actively sought feedback from governments and regulators around the world, and the project evolved substantially and improved as a result. In the United States, a senior regulator informed us that Diem was the best-designed stablecoin project the US Government had seen.
That said, it’s unclear what Silvergate plans to do with Diem.
Facebook rebranded to Meta last year as Mark Zuckerberg wants to pivot his social media empire to the so-called metaverse. It all happened during a massive Facebook scandal. Therefore the name change should have helped Facebook get rid of its bad reputation.
The metaverse is a somewhat utopian future of the internet experience. The idea is that people will use virtual and augmented reality social experiences for both work and entertainment. Nevertheless, the metaverse is one place where cryptocurrencies can thrive, including stablecoins like Diem. Zuckerberg & Co. might have decided to abandon the Diem cryptocurrency, but they’re not out of the crypto business.
Recently, we heard that Facebook and Instagram are looking to incorporate NFT support in the social experience. Twitter already beat them to it. Adding NFT support to social networks involves technology that allows users to interact with the blockchain. Setting up a marketplace for users to sell or buy NFTs could be a lucrative deal for Facebook. You don’t need to own your own crypto for that.
Finally, there is one other piece of cryptocurrency tech that’s related to the Diem initiative. That’s the Novi wallet that Facebook owns. Novi supports the transfer of money via WhatsApp, although that’s just a pilot program. However, Novi might have a future in Facebook’s broader crypto strategy, including the metaverse and NFTs.
