Zuckerberg’s crypto ambitions fall apart as Meta considers selling off Diem

Image Source: Wit Olszewski, Shutterstock

Highlights

  • Facebook and 20 partner organizations formally joined the digital currency project during a meeting in Geneva in October 2019.

  • Zuckerberg was summoned by the Federal Reserve to speak for the project and defend it in the light of growing regulatory scrutiny.

  • The move is viewed as a way for the company toreinstitute funds to its investors.

Meta Platform Inc’s (FB) aspiring yet contentious cryptocurrency project Diem Association might be shelved. Launched initially as Libra and later renamed as the Diem Association, Mark Zuckerberg’s ambitious cryptocurrency stable coin project is reportedly going for an asset sale.

The once high-flying project might be crippling. So why has this ambitious crypto project come to this state and what is Meta planning to do?

Regulatory hurdles

Facebook and 20 partner organizations formally joined the digital currency project during a meeting in Geneva in October 2019. Earlier, to win regulators' trust and attention, Facebook had announced that its cryptocurrency would offer stable coins supported by just one nation's currency. It meant that some coins offered would have the value of a dollar or a Euro.

But, various regulatory hurdles came in the way of this highly ambitious project. Zuckerberg was summoned by the Federal Reserve to speak for the project and defend it in the light of growing regulatory scrutiny. Even the currency's co-creator David Marcus had left the project; hence, significantly reducing its scope. Facebook also began its own cryptocurrency wallet, originally planned for Diem with the Paxos stablecoin in 2021, hinting at the idea's doom.

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Description: Zuckerberg’s crypto ambitions fall apart as Meta considers selling off Diem

What now?

It was recently reported by the Fortune magazine that this step had been planned to return capital to its investing members. Diem is reportedly in talks with some investment bankers about the best way to sell its intellectual property. As per news reports, it is also trying to find a new home for the engineers who have developed this technology.

The move is viewed as a way for the company to reinstitute funds to its investors. According to various sources, Meta controls around one-third of the association. The partnership of the association’s members owns the rest two-thirds.

The association had apparently arranged with the Silvergate Capital Corp to issue the digital token, but resistance from the US Federal Reserve is coming in its way. Silvergate Capital Corp is a holding company for its crypto-focused bank, which offers financial infrastructure and services to investors in digital assets.

In conclusion, the project’s doom was highlighted well when Marcus, who had always managed Diem, exited from it to pursue his personal projects. But it is yet to be seen what this action would yield for the company.


 


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