Bloomberg reports potential collapse of Meta’s Diem project

The Meta-backed stablecoin project Diem (formerly Libra) is unraveling under regulatory pressure, Bloomberg reports.

According to sources cited by the publication, the Diem Association is considering selling intellectual property and other assets to ‘return capital to member investors’.

The consortium is also seeking new roles for its software engineers.

Plans by Facebook (now Meta) to launch its own cryptocurrency were revealed in 2018.

In June 2019, the Libra stablecoin project, backed by a basket of currencies, was officially announced with the publication of a white paper. At the same time, Facebook unveiled the Calibra wallet. The unit behind the project was previously led by former Coinbase director and Facebook vice-president David Marcus.

To oversee the payments network, Facebook created a non-profit organization, the Libra Association. Among its members were Visa, Mastercard, PayPal, Uber, Spotify, Andreessen Horowitz, Coinbase and other well-known companies.

The Facebook cryptocurrency project drew regulatory concern, with hearings on it held in the U.S. Senate Banking Committee in July.

In October it emerged that Visa, Mastercard, PayPal and Stripe were slow to sign formal participation agreements with the Libra Association due to regulatory concerns. They subsequently withdrew from the project.

In May 2020, Facebook rebranded the Libra wallet from Calibra to Novi and created a new operator for it. In December, the consortium behind the project renamed its name to the Diem Association.

Despite repeated announcements, the launch of the Diem coin never materialised.

In 2021, stablecoins drew increasing scrutiny from financial regulators, both in the United States, including SEC and Treasury, as well as globally.

According to Bloomberg, in May the Diem Association signed an agreement to issue Diem with Silvergate Bank, which was to become the issuer of the dollar-linked stablecoin. However, the bank did not receive approval from the U.S. Federal Reserve.

Sources cited by Bloomberg described this as the final blow to Meta’s cryptocurrency plans.

In December 2021, Meta’s head of payments David Marcus announced his departure from the company.