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• Diem, an initiative to develop a stablecoi , is reportedly trying to sell its assets to return capital to its investors
• David Marcus, who co-founded Diem and headed Meta’s digital wallet Novi, left the company last year
Meta Platforms Inc (NASDAQ: FB) backed controversial crypto project Diem, an initiative to develop a stablecoin that Mark Zuckerberg once defended in front of Congress, is reportedly trying to sell its assets to return capital to its investors.
The Diem Association — formerly known as Libra — is discussing with investment bankers to determine the best way to sell its intellectual property to cash out on whatever value the project has maintained, Bloomberg News reported, citing people familiar with the matter.
It’s unclear how the asset will be valued, and sources told the news agency that there’s no guarantee Diem will find a buyer.
While about a third of the venture is owned by Meta, the rest of it is owned by the members of the association, who invested and paid to join when the group was formed, the report said.
Although it is not clear which firms, besides Meta, invested in the initiative, Diem’s website shows that its partners include venture capital firms like Andreessen Horowitz, Union Square Ventures, Singapore state-owned investor Temasek Holdings Pte, and crypto-focused companies like Coinbase Global Inc (NASDAQ: COIN), and others like Uber Technologies Inc (NYSE: UBER) and Shopify Inc (NYSE: SHOP).
Repeated blow to Diem
In 2019, Facebook announced its plans to develop and launch a cryptocurrency called Libra, which would be pegged to a basket of low-volatility assets rather than one specific currency and offered to send money around the world with lower fees than traditional methods through its digital wallet called Calibra.
However, after receiving flak from regulators worldwide, several high-profile members left Libra Association, and the social media giant afterward renamed the project to Diem.
The project’s ambitions have scaled back since then.
Diem partnered with Silvergate Bank in May to issue the stablecoin and dropped the idea of pegging it to a mixed currency basket and instead pegged with the U.S. dollar.
However, resistance from the U.S. Federal Reserve last summer left Silvergate unable to issue the digital currency, sources told Bloomberg.
Later, David Marcus, the co-founder of Diem and head of Meta’s digital wallet Novi, said the payments system in the U.S. is “broken”, and the social media giant can fix it with the help of its Diem payment infrastructure.
However, in a report published in November, the President’s Working Group on Financial Markets said that only regulated banks should issue stablecoins if the tokens are to be used as a means of buying and selling things.
The regulators said if big tech companies started issuing stablecoins and users suddenly began transacting in a new currency, it “could lead to an excessive concentration of economic power” in the hands of corporations.
Last December, Meta launched a trial for its crypto wallet, Novi, that will allow users to send and receive money through WhatsApp, but using Pax Dollars (USDP), a stablecoin by Paxos instead of Diem.
Picture Credit: Decrypt