Regulatory pressures have stalled the Diem cryptocurrency project that Facebook once passionately launched.
The startup, formerly known as Libra, now plans to repay its investors by converting its holdings into cash, Bloomberg reported. Started with very high expectations, Diem is currently discussing with investment banks what might be the best approach to sell its intellectual property and use the residual value.
It is unclear how Diem’s intellectual property will be valued by potential buyers or the engineers behind the project. According to Bloomberg, the talks are still in the early stages and there are no buyer guarantees.
An ambitious venture announced by Facebook (now Meta) in 2019, Diem would operate as a digital currency and an alternative to the US dollar and other government-administered foreign currencies.
But due to concerns among regulators that it could destabilize financial stability and avoid user privacy, Facebook said it will only launch as a single dollar-backed coin.
CEO Mark Zuckerberg testified to the US Congress in October 2019 that Diem would only be released after receiving full US regulatory approval. However, despite having prominent backers such as Mastercard, Visa, and PayPal, the stablecoin project has repeatedly slipped into the regulatory radar.
The Diem Association has agreed with crypto bank Silvergate Capital to issue its stablecoin, but reports that the Federal Reserve is blocking the eventual efforts. Fed officials told Diem advocates that they were uncomfortable with the plan and could not allow it to continue, sources told Bloomberg.