Facebook’s much-anticipated foray into cryptocurrency has got off to a modest start, with the project it is backing confirming that it will launch a stablecoin pegged to the U.S. dollar.
The social media giant had announced ambitious plans to launch a global digital currency named Libra in partnership with Visa and PayPal in 2019, but the plan foundered amid regulatory issues, and it instead looked to the membership-based Diem Association for a scaled-down version.
Diem Association said in a statement that subsidiary Diem Networks US is partnering with Silvergate Capital, which serves a range of crypto companies, in an arrangement that will see Silvergate become the exclusive issuer of the Diem U.S. dollar stablecoin. The association is also announcing a strategic shift of its primary operations from Switzerland to the U.S.
Diem Networks US will run the Diem Payment Network, a permissioned blockchain-based payment system.
Diem’s move from private banking-friendly Switzerland to the U.S., where the finance sector faces much stricter regulation and enforcement, may be seen by some as the end of Facebook’s global cryptocurrency aspirations, but it may position the social network’s more modest crypto outing for greater success with users in the financial mainstream and the growing stablecoin segment.