Silvergate rushes with $200 million bid over failed Project Diem

Silvergate Bank is giving Diem, also known as Facebook Coin, a way out by buying back the assets of the failed project.

Since its unveiling in the summer of 2019, Libra, as it was then known, has faced an uphill battle to win over both regulators and the crypto community.

Facebook founder Mark Zuckerberg previously said the launch of Diem was dependent on obtaining US regulatory approval. But Diem CEO Stuart Levey said regulators snubbed the project in a press release sent Monday.

“It nonetheless became clear from our dialogue with federal regulators that the project could not proceed.”

The $200 million deal will see the intellectual property and other technology assets acquired by Silvergate, which was previously a partner in Project Diem.

But what has Silvergate planned?

Game over for Diem

From the beginning, Facebook Coin struggled to convince the public of its merits. The main point of contention centered on consolidating Facebook’s already considerable influence.

Although Facebook went to great lengths to part ways with the project, mostly through an organizational structure of 100 founding members, each with equal say, it wasn’t enough to convince people of its goals of fostering greater greater financial inclusion and user safety. .

Levey said a senior regulator has declared the Diem payment network to be the best-designed stablecoin project ever seen. Even so, for reasons Levey did not specify, regulators eventually pulled the plug.

The only option left to Diem was to wind down its operations and sell the project assets in an effort to salvage what was left.

“As a result, the best course of action was to sell the Diem Group assets, as we did today at Silvergate.”

What does Silvergate plan to do with the assets?

Speaking to CNBC, Silvergate CEO Alan Lane said he hopes to use Diem’s ​​assets and intellectual property to launch a stablecoin by the end of this year.

Having worked closely with Diem, Lane said Silvergate got to “know the team really well”. He hopes to pick up where Diem left off by bringing his own stablecoin offering to market.

“We were working last year with Diem and got to know the team very well, and we couldn’t be more excited about basically taking the reins and hopefully bringing a stablecoin to market. later this year.”

In recent times, US lawmakers have increasingly focused their attention on stablecoins. A virtual hearing, titled “Digital Assets and the Future of Finance: The Report of the President’s Financial Markets Task Force on Stablecoins,” is scheduled for February 8.

Participants are expected to further discuss risk protection with a view to developing a regulatory framework.