(Bloomberg) — Diem, the cryptocurrency venture once defended by Mark Zuckerberg in front of Congress, has agreed to sell its assets to Silvergate Capital Corp. for about $200 million, according to a person familiar with the matter.
The ambitious project to create global, stable digital currencies, which Zuckerberg’s Meta Platforms Inc. launched along with a set of partners in 2019, had unraveled after constant regulatory scrutiny, leading to a search for a buyer, Bloomberg reported this week. The initiative had changed its name and scaled back ambitions. Now, all of the investors in Diem, formerly known as Libra, have been made whole, according to a person familiar with the matter. The Wall Street Journal earlier reported the sale.
Meta and Silvergate didn’t immediately respond to a request for comment. The Diem Association declined to comment.
Silvergate was already a part of the Diem project. Diem had said in May that the bank was to be the issuer of the Diem USD stablecoin, a type of digital token that is pegged to the U.S. dollar and typically used to buy and sell other crypto. After a lengthy back-and-forth between the Diem advocates and regulators, officials at the U.S. Federal Reserve finally told Silvergate last summer that the agency was uneasy with the plan and couldn’t assure the bank that it would allow that activity, people familiar with the matter have told Bloomberg.
During those earlier negotiations with the Federal Reserve, the Fed and other regulators feared an instant, massive scale of billions of Facebook-linked Diem users. The agencies moved to make their position more clear, which they did in November in a report from the President’s Working Group on Financial Markets.
Now, financial watchdogs are operating from a universal position that stablecoins that are meant for buying and selling things should be issued by regulated banks. That could put Silvergate in a position to attempt a stablecoin by itself.
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
