Several American newspapers in recent days have written that Meta, the company that controls the social network Facebook, among other things, could soon abandon its project to create a cryptocurrency, which was presented in 2019 as Libra and which has more recently changed. name in Diem.
According to sources informed of the facts, cited among others by the Wall Street Journal and Bloomberg, Meta should sell all the technology behind its cryptocurrency to the US bank Silvergate, for 200 million dollars, after noting the de facto failure of its project. , very ambitious, to create a new digital currency with worldwide validity, to be used for transactions on Facebook and beyond.
Meta unveiled its cryptocurrency creation project in June 2019, when the company was still just called Facebook. The project was to create a digital currency to simplify online payments and untie them from traditional bank fee schemes. It was said at the time that the cryptocurrency should be called Libra, but about a year later the name was changed to Diem. The cryptocurrency would have been managed by an association (initially called the “Libra Association” and later become the “Diem Association”), and not directly by Facebook.
The birth and path of creation of Facebook's cryptocurrency, which never received the approval of the US regulators, however, had immediately had problems and several slowdowns. Initially, Facebook had entered into an agreement with the two largest credit card operators in the world – VISA and Mastercard – and with PayPal and eBay, which were to invest in the fund to which the value of the cryptocurrency would be “linked”. However, in October 2019, all of these companies had decided to leave the fund.
Among the reasons for abandoning the project was the fear of not being able to meet all the demands of American financial institutions, worried that the new currency could be exploited for money laundering and other illicit activities. Jerome Powell, chairman of the Federal Reserve, the central bank of the United States, had also expressed “serious concerns” about the financial stability of the cryptocurrency. And the European Commission had requested more information on the project, believing it could harm free online competition, given the size of Facebook and the fact that the company controls some of the most used apps on the market, such as WhatsApp and Instagram.
The change of name to Diem came right after the abandonment of these companies and after the testimony before the United States Congress of the CEO of Facebook, Mark Zuckerberg, called to answer for the stability and transparency of the cryptocurrency. However, even the “rebranding” did not satisfy US investors and authorities and the project had been progressively downsized.
In the beginning, the cryptocurrency should have been linked to multiple international currencies in order to avoid excessive swings typical of cryptocurrencies not linked to national currencies (such as bitcoin). But in May 2021 the “Diem Association” had decided to link its cryptocurrency only to the US dollar. He then made a deal with the Silvergate bank, which was supposed to issue the currency, hoping to reassure the US regulatory authorities, but they continued to remain skeptical of Facebook's cryptocurrency. The latest stumbling block in the project came last December, when David Marcus, an executive who had headed the Diem project, decided to leave the company.
