Facebook-Backed Diem Partners With Silvergate Bank to Issue US Dollar Stablecoin

Diem is moving its "primary operations" from Switzerland to the U.S.

AccessTimeIconMay 12, 2021 at 8:26 p.m. UTC
Updated Sep 14, 2021 at 12:54 p.m. UTC

The Diem Association, the Facebook-linked group building a stablecoin, is partnering with Silvergate Bank to launch a U.S. dollar-pegged stablecoin.

Diem Networks US, a subsidiary of the association, will run the Diem Payments Network and register as a money services business with the Financial Crimes Enforcement Network (FinCEN), while Silvergate will be the formal issuer of the Diem USD stablecoin. Silvergate will also manage the reserve backing the token.

The DPN will be a permissioned network, allowing only approved participants to transact, according to the Wednesday announcement. Silvergate already operates its own payments network, the Silvergate Exchange Network, and provides support for stablecoin transactions.

Diem, formerly known as Libra, will also move its operations out of Switzerland and withdraw its application for a Swiss Financial Markets Authority license, the press release said.

"We are committed to a payment system that is safe for consumers and businesses, makes payments faster and cheaper, and takes advantage of blockchain technology to bring the benefits of the financial system to more people around the world. We look forward to working with Silvergate to realize this shared vision," Diem CEO Stuart Levey said in a statement.

The move represents a sharp departure from Diem's origins as the Libra Association, which was announced by Facebook in the summer of 2019 and formally created as a partnership with buy-in from a host of different companies in Switzerland that fall.

Diem hoped to launch a FINMA-approved product as recently as this past December.

The then-Libra Association abandoned the original stablecoin vision – as a token backed by a basket composed of different fiat currencies – after regulatory pushback from policymakers worldwide, instead choosing to launch a set of tokens, each backed by a single fiat currency.

The dollar stablecoin will be the first pilot project to launch, CNBC reported last month.

UPDATE (May 12, 2021, 20:55 UTC): Updated with additional information and context.

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
CoinDesk - Unknown
First Mover Asia: Bitcoin Holds Above $21K in Weekend Trading; Solana Web3 Phone Faces Long Odds

Ether stays over $1,200; prior blockchain phones have failed because the market has realized their functionalities are already available via apps that can be loaded onto any old phone.

CoinDesk - Unknown
2
CoinDesk - Unknown
Opaque Platforms and Intertwined Protocols Pose Big Risk to Crypto

Second article in a series about risks we’re thinking about during these crypto down days.

CoinDesk - Unknown
3
CoinDesk - Unknown
Putin Weaponizes Inflation

Examining a recent propaganda speech from the Russian leader.

CoinDesk - Unknown
4
CoinDesk - Unknown
Morgan Creek Is Trying to Counter FTX’s BlockFi Bailout, Leaked Call Shows

FTX’s $250 million credit facility offer – if inked as initially proposed – stood to effectively wipe out all BlockFi shareholders, including Morgan Creek Digital, the firm told its investors.

CoinDesk - Unknown