The digital currency group, Diem Association, previously known to be Facebook’s Libra project, is planning to launch a US dollar stablecoin. It is so because now Diem wants to shift back its global ambitions to concentrate on the United States.
The association, which comes with 26 financial firms and non-profits, says that it was relocating its chief operations from Switzerland to the United States. It is withdrawing its payment system license application along with the Swiss financial regulator.
Diem Networks US works as a unit of the Diem Association. It is going to run a blockchain payment system that will allow real-time transferring of Diem stablecoins. Also, it intends to register as a money services business with the US Department of the Treasury’s Financial Crimes Enforcement Network.
Stablecoin is a digital currency which, is attached to fiat currency. The California-based Silvergate Bank will opt for issuing Diem USD stablecoin. It is supposed to manage the Diem USD reserve. Diem also said that it would launch a pilot for the stablecoin but did not confirm the date yet.
“We are committed to a payment system that is safe for consumers and businesses, makes payments faster and cheaper,” the association said.
In a statement, the Swiss Financial Market Supervisory Authority came with the confirmation of Diem’s decision to withdraw its application for a payment-related license.
It said, “Diem is planning to launch the payment system from the USA in the first phase because initially, the project will focus on the USA as its target market.”
Facebook first revealed its plans for Libra in June 2019 as a part of its effort to go beyond social networking. Libra, along with its partners like payment firms and credit card companies, would develop a digital token backed by a wide array of currencies and short-term government charges. The social media giant also said that it was hoping Libra would power the transactions between consumers and businesses around the world. Also, it would offer access to financial services to more people.
However, the project instantaneously ran into much ferocious opposition from the global policymakers. They got worried that it could erode their control of the monetary system and permit the occurrence of crimes, and harming of user privacy.
In April 2020, Libra, along with its partners, left all the plans to hold a basket of currencies and sovereign debt in favor of stablecoins backed by significant currencies and tried to obtain the approval of the Swiss regulator. Then, in December, Libra rebranded itself as Diem with a renewed effort to gain more regulatory approval, along with the possibility to scale back to a single dollar-based digital coin.