Facebook’s crypto project Diem sold after pushback

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CRYPTO BOOM

“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,” the Diem Association’s statement said.

Pressed by regulators’ concerns about a currency managed by a private company, the project was previously entrusted to an independent entity based in Geneva.

After the defection of several major partners such as PayPal, Visa and Mastercard, the organization scaled back its ambitions, before renaming itself Diem at the end of 2020.

The so-called stablecoin – a type of digital money tied to other kinds of assets – never launched.

“The combination of a stablecoin issuer or wallet provider and a commercial firm could lead to an excessive concentration of economic power,” US regulators said in a 2021 report.

“These policy concerns are analogous to those traditionally associated with the mixing of banking and commerce, such as advantages in accessing credit or using data to market or restrict access to products,” it added.

Facebook, which renamed itself Meta in October, has faced criticism on the dominant position it holds online, yet it is not the only powerful organization interested in crypto.

The European Central Bank in July formally launched a pilot project to create a “digital euro”, in response to the growing popularity of electronic payments and the rise of cryptocurrencies.

Central banks are also responding to increased demand for digital payment options as cash use continues to decline, a trend fueled by the COVID-19 pandemic and the desire to avoid contact.

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