Facebook’s shrinking plans for a digital currency was down-scaled again when digital currency group Diem Association, earlier known as the social media company’s Libra project, announced it will focus on a blockchain currency for the US and not for the world which was the original idea.
The association said it is relocating its main operations from Switzerland to the US and withdrawing its payment system license application with the Swiss financial regulator. Facebook’s digital wallet Novi is one of Diem’s 26 members.
Diem Networks US, a unit of the Diem Association, will run a blockchain-based payment system that allows real-time transfer of Diem stablecoins and will register as a money services business with the US Department of the Treasury’s Financial Crimes Enforcement Network, the group said in a statement.
DIGITAL SINGLE DOLLAR
Stablecoins are digital currencies pegged to a currency. US-company Silvergate Bank will issue the Diem USD stablecoin and manage the Diem USD reserve.
“We are committed to a payment system that is safe for consumers and businesses, makes payments faster and cheaper,” the association said.
Facebook announced its plans for digital currency Libra, meant for e-commerce, in 2019. However, the project soon ran into problem with policymakers being worried about security and privacy. The project changed a year ago and the Swiss based stablecoin project was launched with a single-dollar digital coin.
“We believe in the future of U.S. dollar backed stablecoins and their potential to transform existing payment systems,” said Alan Lane, chief executive officer of Silvergate.
In a statement Diem said that parallel with establishing the partnership, Diem is simplifying its plans for the Diem USD stablecoin issuance by shifting its main operations from Switzerland to the United States. “This shift is consistent with Diem’s initial strategic focus on the United States and reflects Diem’s consideration of the evolving digital currency regulatory environment in the US.”