Facebook (now Meta) is officially winding down the stablecoin project it announced in June 2019.
The Diem Association is shutting down.
Silvergate Bank confirmed Monday that it’s purchasing the technology and other assets from Diem, the stablecoin project from Meta Platforms (formerly Facebook) first announced as Libra in June 2019.
In a statement Monday, the Diem Association said it would “begin the process of winding down” both the group and its subsidiaries over the next few weeks.
It described Diem’s work as running “in a pre-launch phase.” Diem has faced stiff regulatory headwinds since it was first announced in June 2019. Rumors that Diem was looking to sell its assets to repay investors have been swirling since last week.
In Diem’s statement, CEO Stuart Levey said, “a senior regulator informed us that Diem was the best-designed stablecoin project the U.S. Government had seen.”
But he added that “it became clear” from the group’s conversations with federal regulators that they would not be able to launch Diem.
Silvergate said it issued $132 million in Class A common shares and paid an additional $50 million in cash to acquire the assets. At press time, Silvergate’s share price was trading at $107.74, up 13.4% on the day.
Silvergate partnered with the Diem Association last year to try to launch a dollar-backed stablecoin. Under the terms of that arrangement, Silvergate would both manage the reserves and issue the stablecoin itself. That planned pilot program reportedly met with resistance from federal banking regulators.
In a statement, Silvergate CEO Alan Lane said his bank is “committed to continuing to foster the open-source community that supports the technology, and we believe that existing contributors will be excited about our vision going forward.”
He said his bank found a need for a dollar-backed stablecoin that is both “regulated and highly scalable.” Silvergate intends to launch such a stablecoin by the end of the year.