The Federal Reserve takes a dim view of the controversial cryptocurrency launched by Facebook in 2019. What comes next?
Mark Zuckerberg's Meta Platforms and other consortium members are considering the future of Diem after the Federal Reserve indicated it was uneasy with the plans last summer, Bloomberg and other international media reported.
The blockchain-based cryptocurrency was originally launched as Libra by Facebook in 2019 and it still owns a third of the venture, with other Diem Association members holding the remainder.
Diem is now considering an asset sale as a possible way to return capital to investors, Bloomberg (behind paywall) reported on Monday, citing sources familiar with the matter. The association is currently in discussions with investment bankers about the best ways to do so, the newswire said.
Fed No Go
This reportedly follows extended discussions last summer, during which the Federal Reserve indicated to Silvergate Bank, which was slated to be the issuer of the Diem U.S. dollar stablecoin, that it was not comfortable with the plans.
Stablecoins, unlike other cryptocurrencies, are usually pegged to sovereign currencies or tangible financial assets. At the end of 2021, the project lost co-creator David Marcus, who was a Swiss technologist and head of Meta's fintech unit Novi after he had worked there for over seven years.
Earlier in the year, in May, Diem withdrew plans for a Swiss license, saying then that it wanted to focus on the U.S. market.
