The once ambitious Facebook-backed digital currency project (formerly known as Libra, now known as Diem) is moving its business from Switzerland to the U.S. dollar and said it plans to launch a U.S. dollar-pegged cryptocurrency later this year.
Diem said that as part of this move, the company also withdrew its payment system license application from the Swiss Financial Markets Authority, which has so far been unable to obtain the license.
The Diem Association, which includes Facebook and 25 other companies, said Wednesday has it entered a partnership with Silvergate Capital Corp. to issue a “stablecoin” backed by the U.S. dollar. A stablecoin is a digital currency backed by real-world assets such as national currencies or other commodities.
As the name implies, stablecoins are designed to not fluctuate wildly in value. That’s in sharp contrast to cryptocurrencies like Bitcoin, whose value is not tied to a real-world currency and whose price has ranged between roughly $9,000 and $63,000 over the past year.
Facebook announced the Libra project in 2019, at the time envisioning it as a stablecoin based on a basket of national currencies. Since then, the effort has been scaled back considerably amid regulatory and commercial backlash. It underwent a name change in December 2020.
The announcement on Wednesday represented a further reduction of Diem, as Diem shifted its focus from its original ambitions to the United States, becoming the world’s unbanked global currency.