Facebook-backed Diem sells assets after scrapping its cryptocurrency project

This is the end of the line for Meta’s crypto plans – at least for now.

On Monday, the Diem Association announced it has sold its intellectual property (and other assets related to the running of Diem Payment Network) to the crypto-oriented bank Silvergate for $200 million.

Diem’s main product was a blockchain and a stablecoin operating on that blockchain, a special type of cryptocurrency tied to real world currencies which could be used as a sort of universal currency. And while many such products exist, Diem was originally conceived by Facebook, which turned out to be its biggest problem.

Originally launched in June 2019 under the name Libra, the project was a massive undertaking with a long list of strong partners, including Mastercard, Visa, PayPal, Uber, and Spotify to name a few. And while Facebook positioned itself as just one of the founders, regulators saw the project as the company’s attempt to create its own version of the digital dollar and use Facebook’s massive reach to make it ubiquitous. This sounded like a threat to fiat currencies which are normally only issued by sovereign countries.

Facebook subsequently distanced itself from the project and initiated a series of pivots, in which Libra was renamed Diem, its headquarters moved from Switzerland to the U.S., and the project’s scope narrowed, with key partners pulling out along the way.

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The issue with Libra/Diem was never the stablecoin itself; similar stablecoins exist, as seen in the examples of USDC and USDT (though the companies running them have recently been facing increased regulatory scrutiny, too). It was the fact that it was (sort of) run by Facebook, which simply sounded too scary to regulators. As the former head of the project, David Marcus, put it on Twitter: “Here’s to yet another chapter with a maybe more ‘acceptable’ promoter driving the vision forward.”

At the time of the announcement, Meta CEO Mark Zuckerberg also revealed that Meta will make its crypto patents freely available to anyone.

“The metaverse should be more interoperable and open than any computing platform before. Meta is proud to join the Crypto Open Patent Alliance to make our crypto patents available for anyone to use so we can all build this future together,” Zuckerberg said in a post on Facebook.