Facebook now Meta, originally announced their stablecoins to improve worldwide financial services in 2019. They announced it would be in partnership with numerous other companies. However, the collaboration was unable to shield the program from international regulatory monitoring.
After Zuckerberg was invited to testify, several of the program’s partners dropped out, and it was renamed, Diem. In order to achieve Diem’s objectives, they have to be reevaluated. On the other hand, David Marcus, the company’s creator, exited Meta last year.
Diem announced in May that Silvergate Bank, a subsidiary of the company, would be the publisher of the Diem USD stablecoin. According to the sources, Fed officials warned Silvergate the previous summer that they were concerned with the proposal.
Companies must issue stablecoins in order for it to be recognized as a currency. This is subject to regulatory scrutiny. This is for buying and selling products. Silvergate was incapable of releasing the new coin with the assurance that the Fed would not crackdown. Thus, the Diem project had no coin.
According to sources aware of the situation, the Diem Association is now considering selling its assets. This is to repay funds to its investment members. Diem is in talks with investment bankers over how to best sell its intellectual assets. Also, it suggests a new home for the engineers who created the technology.
It is uncertain how much Diem’s intellectual assets, or the engineers who worked to design. It might be worth to a possible buyer. Moreover, the sources stressed that talks are still in the early stages. There is no certainty that Diem will locate a buyer.
As per one of the sources, Facebook owns around a third of the company. Diem members hold the rest of the shares. Members of the association include investment firms and tech firms. Only if they invested and paid to join when it was first established. Apart from Meta, it is unknown which companies invested in the program.
Furthermore, Diem’s website lists venture capital firms, including Andreessen Horowitz and Thrive Capital, as partners. Additionally, its website also contains crypto-focused businesses, including Coinbase Global Inc. Also, it includes Uber Technologies Inc. and Shopify Inc., an e-commerce network.
The federal regulatory agencies finally declared what they were after in November. Also, producers need to be subject to government regulation. In the future, stablecoins may be accepted as a means of payment. This is according to a report by the President’s Working Group on Financial Markets.
The team of regulators expressed concern about what would follow if a large network of users quickly started trading in a new currency. Finally, they added that pairing a stablecoin producer with a large organization like Facebook. It may result in an unsustainable amount of economic influence.
“The views and opinions on this Crypto News Website are solely those of the authors and contributors. These views and opinions do not necessarily represent those of iBaseTrading or its partners.”