After two years of struggling to get its cryptocurrency off the ground, it appears that Facebook is ready to back away from the project. Even Diem, which was originally founded to sell this cryptocurrency, will be sold after more than two years as Facebook steps away from Diem from its first announcement. The Facebook-sponsored cryptocurrency formerly known as Libra appears to be on the verge of completion. The Diem Association set up by Facebook to manage digital tokens is exploring selling its assets after facing resistance from regulators opposed to the initiative. The US Federal Reserve is pressuring Silvergate, Diem's banking partner, to launch the digital token, Bloomberg reports. Diem Association spokesman Michael Crittendon said Bloomberg's report does not match the facts.
Unfortunately, Diem declined to comment further on the matter. If Diem sells his assets, it could be an indication that the crypto money that Facebook is about to release cannot be done. Contents of the topic Toggle Facebook abandons the digital currency project Diem The difference between cryptocurrencies and fiat currencies Worried about monopoly?
What is DIM?
Criticism from heads of state and financial regulatory bodies Meta CEO position Facebook abandons the Diem digital currency project Initially, the Libra currency was supposed to be a digital token backed by a basket of currencies from around the world, but regulators quickly stopped this idea and then a simplified design was created, which led to the creation of Diem tokens that were converted into the US dollar. But why is Facebook abandoning Diem, probably because it did not see any signs that Facebook would be serious about making cryptocurrencies. This was done when Facebook launched a digital wallet originally created for Diem coins with other Paxos stablecoins. The CEO who originally proposed Libra and leads the Meta digital wallet left the company late last year. After that, most of the project's founding team began to quit.
The difference between cryptocurrencies and fiat currencies Since 2019, Meta Facebook previously planned to launch its own virtual currency, Libra, which was later renamed Diem. However, in 2022, this speech is said to have deviated midway, because the Diem project will soon end. According to a Bloomberg report, Facebook is divesting from Diem, an independent association regulated by Facebook to manage digital money, which is exploring a sale of its assets. This was done by Diem after his party did not receive approval from the regulator. This is an indication that Facebook's currency project, Diem, will soon be shut down.
The reason is that after two years of preparation, this virtual money project received criticism and rejection from US regulators, for example from the US central bank also known as the Federal Reserve (Federal Reserve). Without the green light from the regulator yet, Meta has been unable to launch Diem. Diem Association spokesman Michael Crittenden said the Bloomberg story contained “some factual errors” but declined to comment further. Meta and the Fed itself have not commented on the matter.
Worried about monopoly?
It was not explained why the regulator did not approve of Facebook launching its own digital money. But according to a Bloomberg report, it is feared that the project will make Facebook monopolize the economy. The issuer of stablecoins that will be used as a means of buying and selling goods, must be a bank regulated by a regulator, the President's Working Group on Financial Markets wrote in a report.
If the issuer of the stablecoin is a tech giant, in this case Facebook, it is feared that a large number of Facebook users will suddenly start transacting in the new currency. In addition to this and why Facebook is abandoning Diem, it is also feared that non-bank stablecoin issuers will merge with other large companies, so that “it could lead to an excessive concentration of economic power,” as compiled by Bloomberg’s KompasTekno. A stablecoin is a cryptocurrency that is based on a specific currency, so its value does not fluctuate against that currency. For example, the value of a stablecoin based on the US dollar will remain at 1 USD.
What is DIM?
Initially, the digital money project created by Facebook was called “Libra” in 2019, then it changed its name to “Diem” in 2020. At the beginning of the existence of this project, Facebook formed the Libra Association, a 27-member federation of digital service providers, such as digital service providers for businesses such as Spotify, Uber, Lyft, Shopify, and Farfetch. The Libra Association originally intended to issue a cryptocurrency with a value based on several currencies.
Libra virtual money can later be used to buy goods or send money to fellow users for free. This cryptocurrency can also be exchanged for local currency online or through offline stores. Users can then store them in a digital wallet created independently by Facebook called “Calibra.” This service will be included in WhatsApp, Messenger, and Facebook.
However, this turned out to be a concern for central banks and regulators, so the Libra Association then decided to offer an alternative in the form of stablecoins. In addition to the US dollar, the Libra Association will reportedly help create stablecoins based on different currencies such as the euro or the British pound and the Singapore dollar in the future, along with other types of cryptocurrencies. The original plan was to launch the Libra digital currency in mid-2020 and now Facebook is abandoning Diem. Criticism from Heads of State and Financial Regulators However, Libra received criticism from heads of state and financial regulators to finally launch in 2020, Libra changed its name to Diem. At that time, Diem's CEO, Stuart Levy, admitted that he changed the name of his virtual money to Diem so that it could be accepted by regulators.
He also said that Diem will later adapt to international regulations at the protocol level. The association is still trying to communicate with regulators around the world to clarify the prevalence of each token and the currency to be agreed upon, which will be determined after that. Besides changing the name of virtual money, Facebook has also changed the name of its virtual wallet, Calibra to Novi. Novi allows people to send money through its app or through Facebook Messenger and WhatsApp After changing its name, Diem is said to launch in early 2021.
However, this plan has not been realized yet and Facebook is abandoning Diem. Meta CEO’s position According to him, it was the company’s intention to meet this need by launching a stablecoin in 2022. Mark Zuckerberg as CEO of Meta introduced the digital currency project in 2019.
Before Diem, its name was still Libra and involved global companies such as Mastercard, PayPal, Visa, eBay and others. Then the project faced enormous regulatory pressure. US financial authorities are concerned that companies have the potential to capture too much of the profits in the financial sector. Read also: Everything you should know about the currency trading market Despite much criticism, Meta then launched the Navi digital wallet on WhatsApp in December 2021. This digital wallet aims to be a means of payment for transactions made on WhatsApp.
#Facebook abandons Diem #digital currency project
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