Facebook breathes new life into a crypto project
Facebook is reviving its controversial project for a new crypto coin. The Diem Association, the project of 26 companies and non-profit groups, including Facebook, is moving most of its activities to the United States.
The crypto project was previously known as Libra but was recently renamed, Diem. It is now collaborating with a bank to issue a crypto coin, the Diem, backed by US dollars. The new plan includes an agreement with Silvergate Capital, a prominent player in the cryptocurrency industry. This company will issue the coin and also manage Diem’s funds.
When Facebook unveiled the Libra project, it said it planned to create one global digital currency. This would allow anyone worldwide, including the 1.7 billion people who do not have a bank account, to transfer money anywhere in the world with the same ease as sending a text message. Diem also aims to build a worldwide payment network.
Influence of central banks
The Libra, which should have been supported by the euro and other currencies in addition to the dollar, had previously hit a wall of resistance. Regulators were concerned that Libra could undermine the influence of central banks, resulting in financial instability. For example, there were also fears that the crypto coin could easily be used by criminals for money laundering.
According to the initiators, Diem stands for a crypto project in which more attention is paid to the concerns of regulators. The currency will be pegged to the dollar. The consortium behind the Diem is also working on measures to combat money laundering via the currency.
According to the initiators, it is crucial for the US to promote innovation in the field of crypto coins. According to Diem CEO Stuart Levey, the project could reduce the cost of sending money, be it the Diem or other cryptos that central banks in many countries would consider.
Diem has not yet received a necessary license from the regulator in Switzerland, the country where the head office is located. Although Diem says he does expect approval in the long term, most of the activities will be relocated to the US. Diem’s US subsidiary wants to register as a money transfer office in the US.