Diem, the stablecoin cryptocurrency project backed by Mark Zuckerberg, has often faced regulatory pushback. But the project has finally been sounded its death knell, as the creators behind the stablecoin are looking to sell their assets to recoup the costs borne by investors, reported Bloomberg.
The Diem Association is a cryptocurrency initiative that is backed by Meta Platforms. The association is now weighing a sale of its assets, like intellectual property and its team of developers and engineers.
While it is unclear how exactly such assets would be valued, the association hopes to recoup the investments that various companies and entities funnelled into the development of the stablecoin.
It is entirely possible that the association would be unable to find any buyers as well.
What are stablecoins?
A stablecoin is a digital currency that's fixed to an underlying asset, like a commodity or the US dollar, and does not fluctuate in value on its own. Stablecoins have been stated to have a real-life use case in the form of international payments and quick transfer of money.
What went wrong with Diem?
But Diem has faced constant regulatory pushback since its inception. Zuckerberg was called in to testify about the project before the US government almost immediately. This, in turn, spooked many of the dozen or so companies that had been collaborating with Facebook on the project.
The association had, at one point, partnered with Silvergate Capital, which would be issuing the Diem stablecoin through its affiliate, the Silvergate Bank. But without any assurance from the US Federal Reserve about the issuance being alright, the plan was dropped.
Apart from Meta, which owns about a third of the venture, other partners include Andreessen Horowitz, Union Square Ventures, Ribbit Capital, Thrive Capital, Singapore state-owned investor Temasek Holdings Pte. The Diem Association website also lists Coinbase Global, Uber Technologies and Shopify among others.
(Edited by : Shoma Bhattacharjee)
First Published: IST