Mark Zuckerberg's cryptocurrency project Diem eyes asset sale

Meta partnered with Silvergate Bank to potentially issue a Diem USD stablecoin (Image Courtesy: Reuters)

The Diem Association (formerly named Libra), home to Meta Platforms Inc honcho Mark Zuckerberg's ambitious cryptocurrency stablecoin venture, is eying an asset sale more than two years after the project was launched, in order to monetise its intellectual property and any other economic value left in the crippled, formerly high-flying undertaking, per Fortune.

In 2019, Meta first floated the idea of a stable digital currency or a stablecoin, with the intention of "revolutionising global financial services", which would pan out as a collaborative effort between various companies.

Meta had then partnered with Silvergate Bank to potentially issue a Diem USD stablecoin. Notably, stablecoins are less volatile compared to their other crypto counterparts, given that they are pegged to a specific asset class, which in this case, was the dollar.

But per reports, negotiations concluded unsuccessfully between Diem and Fed when the latter did not green-light the proposal, leaving Silvergate unable to issue any asset without the fear of a Fed crackdown looming large.

Notably, after Zuckerberg was called by the Federal Reserve to defend this project in the wake of rising regulatory scrutiny, Meta also saw the departure of its co-founder David Marcus, bringing down the scale of the scope of Diem drastically. And in 2021, Facebook also piloted its cryptocurrency wallet, which was originally intended for Diem with the Paxos stablecoin, signalling the idea's impending demise.

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A report released last year by the President’s Working Group on Financial Markets declared that stablecoin issuers should be regulated banks, given that combining an issuer with a big tech corporation could lead to an "excessive concentration of economic power.”

A Diem Association spokesperson, Michael Crittenden, highlighted that the original Bloomberg reportage on the matter contained “some factual errors” but did not comment further, reported the Verge.

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Jack Dorsey, the former CEO of Twitter, tweeted "Carpe Diem" to signal the impending shuttering of the firm. Meta owns a third of the firm's share, with the remaining owned by various members of the association.

Despite no significant clarity on the entities who've invested in Diem, the project website mentions venture capital firms like Andreessen Horowitz, Union Square Ventures, Ribbit Capital, and Thrive Capital as well as Singapore state-owned investor Temasek Holdings Pte, in addition to crypto-focused Coinbase Global Inc, ride-hailing app Uber, Shopify and more.