Facebook’s cryptocurrency dreams might never be realized as the company is reportedly planning to sell the assets of its Diem crypto initiative that once went by the name Libra. Ever since the company announced its crypto ambitions, one of the biggest hurdles to its successful implementation was the brand's own reputation. No sooner than the plans were announced, everyone from privacy activists to Senate members jumped into action, with criticism coming in from all directions. Congresswoman Carolyn Maloney directly told Facebook’s then-crypto head David Marcus that the company shouldn’t launch Libra — at all.
Most of the concerns were to do with trust issues. A company with a history of mishandling user personal data sought to make inroads into people’s financial lives. With partners like Uber and MasterCard, Facebook wanted to create a virtual financial network with a payment system that charged minimal transaction fees. The Libra cryptocurrency, unlike the Bitcoins and Ethereums of the world, was backed by a basket of international currencies ranging from the US Dollar to Euro and Japanese Yen. Libra crypto plans were abandoned in 2020 over regulatory pressure, and the linked Calibra wallet became Novi. International plans were eventually scrapped and Libra transformed into Diem, a stablecoin tied to the US Dollar.
Now, it appears that the Diem plans are facing the risk of being abandoned, for good. Per a Bloomberg report, the Diem Association is searching for potential buyers to offload its assets and return the money funneled into the project back to investors. The company, which now goes by the name Meta, is reportedly in talks with investment bankers to sell the Diem IP and rehabilitate the team members working on the troubled project. The Diem Association partnered with a holding company named Silvergate Capital to issue the Diem stablecoin, but the heat from the US Federal Reserve was reportedly the main reason behind the plans meeting an untimely end.
From Messaging To The Metaverse
“Without a green light from the bank’s regulator, Silvergate was left unable to issue the new asset with confidence the Fed wouldn’t crack down, and so the Diem effort had no coin,” says the report. However, there’s no certainty whether Diem will find a buyer for its undisclosed assets. Interestingly, Meta-owned WhatsApp added support for the Novi wallet back in December last year, allowing users to send money in the form of USDP (Pax Dollar) stablecoin, which has a 1-to-1 conversion rate with the US Dollar. There wasn’t any processing fee involved, either. It remains to be seen whether the Novi wallet lives on in WhatsApp, the world’s most widely used instant messaging app, without any crypto future in its sights.
A potential shutdown of the Diem plans also affects another key ambition that led to the company's change of name — the metaverse. Mark Zuckerberg has said on multiple occasions that the metaverse will have its own flourishing economy, and it was widely speculated that the Libra / Diem coins will play a role in it. Plus, the company is reportedly working on a massive NFT-linked future for Facebook and Instagram, allowing users to do everything from creating digital art to minting NFTs and trading them on a native marketplace. NFTs and cryptos rely on the same fundamental blockchain technology and almost every NFT trading platform out there accepts payments in cryptocurrencies. With the Diem ambitions reportedly shelved, Facebook’s metaverse and NFT plans are likely to feel the ripples.
Source: Bloomberg