Mark Zuckerberg’s stablecoin project, Diem, officially shuts down
April 16, 2022

Mark Zuckerberg’s stablecoin project, Diem, officially shuts down

After two years of trying to find balance in the crypto sphere, Diem has finally packed up. purchasing Bitcoin

The Diem stablecoin project, founded by Mark Zuckerberg's company Meta, formerly known as Facebook, has been terminated. The digital currency failed to make progress despite significant efforts by the brand to launch. It was faced with major regulations from politicians and policymakers every step of the way. This update was announced in late January by the project's Chief Executive Officer, Stuart Levey.

The team has disclosed that all intellectual property and assets associated with the Diem stablecoin venture will be sold to Silvergate Capital Corporation. The Silvergate brand will acquire the asset for a total amount of $182 million. The Diem stablecoin project will slowly be integrated into the existing systems at Silvergate Tech.

Pulling the plug

The entire project cannot be terminated at once. What will happen is that the association and its subdivision will gradually pull the plug on all operations in the next few months. Levy mentioned that this recent development would not bury the ideals related to Diem. He says the Diem association is certain that the idea behind the stablecoin will thrive.

He added that Silvergate is the best option to take the Diem vision to the top. Diem stablecoin has a very high potential to deliver several benefits to users in the future. Meta could have brought this vision to life if only they weren't faced with regulations on all fronts. Levey noted that Silvergate's payment platform is best equipped to utilize Diem's assets. This new partnership will guarantee a next-generation global payment system that is not only easy to use but also faster and more cost-effective than other available solutions. 

Alan Lane, Silvergate CEO, commented that the purchase of the Diem stable coin project reflects its commitment to launching a stablecoin before next year. He said that the Sikvergate team had noticed an urgent need for a stable coin backed by the U.S dollar. He says with Diem, Americans, and foreigners around the world will be able to move money without third-party systems.

Killed by Regulations.

Diem is Mark Zuckerberg's ambitious attempt to introduce millions of people across the globe to the wonderful world of stablecoins and cryptocurrencies. The visionary failed to factor in the reactions of lawmakers and regulators to this project. Not to mention his common habit of attracting controversies.

To many expert crypto users and some notable powers in the government, it was obvious that the Diem project was destined to fail from the start. Diem appeared out of nowhere in 2019, according to Mary Beth Buchanan, an ex-US attorney, and current chief legal officer at Merkle Science, a crypto Intel firm.

Many lawmakers were in the dark about how cryptocurrencies were handled and couldn't quite understand what the project was about. She pointed out that Meta was more or less disengaged from the legislative chambers before and after the stablecoin was announced.

For a project as big as the Diem stablecoin venture, it would have helped a lot if the Meta team had briefed Congress before going ahead. It is also not a secret that there's no love lost between Mark Zuckerberg and members of Congress.

The Future of Stablecoins in the United States

First of all, it's not out of place to state that Diem was far ahead of its time. Stablecoin is the first social media platform ever to attempt to create a stablecoin. Existing stablecoins like USDC and Tether are commonly used within the crypto niche to authorize transactions. Congress does not consider these coins objects of immediate concern because they are decentralized.

The Diem team planned to utilize Diem coins as a mainstream payment method for goods and services. Hillary J. Allen, a law professor, explained that Diem could have been a highly valuable payment system if it had launched. The main issue would have sprung from looking to convince merchants to accept the Diem stablecoin for physical goods and services. 

Diem was best positioned to bring millions of people on board the crypto train. Now that it has failed to move the regulatory gatekeepers, one can only hope that Silvergate will keep the candlelit. Meta had mapped out a path for Silvergate to follow that would ensure a smooth launch of Diem stablecoin in the not-too-distant future.