Diem, the cryptocurrency project headed by Facebook originally known as Libra, recently announced its plans to launch a stablecoin with its focus scaled back to the United States.
The company stated earlier this year that it would be relocating its primary operations from Switzerland back to the United States, and would withdraw its payment system license application from Switzerland’s financial regulators. “Diem is simplifying its plans for [its] USD stablecoin issuance by shifting its main operations from Switzerland to the United States,” they said.
Stablecoins are digital currencies pegged to a fiat currency, with Tether (USDT) and USD Coin (USDC) being two prominent examples. California-based Silvergate Bank will become the sole issuer of the Diem USD, while also managing its dollar reserves.
1/5 Exciting day @DiemAssociation! We are pleased to announce a partnership with @silvergatebank. @silvergatebank will become the exclusive issuer of the ≋USD stablecoin and will manage the ≋USD reserve.
— Christian Catalini (@ccatalini) May 12, 2021
Diem to Launch Wholly New Subsidiary Diem Networks US Alongside Crypto Bank Silvergate
In a strategic partnership, the two firms have created a new subsidiary called Diem Networks US — which will run the Diem Payment Network (DPN) to facilitate transactions of Diem stablecoins within its network.
“Silvergate is a leader in financial innovation and an ideal partner for Diem as we move forward with a blockchain-based payment system that protects consumers and enhances the integrity of the financial system,” said Stuart Levey, chief executive officer of Diem.
“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’s strategic shift to the United States comes at a time of a rapidly evolving regulatory environment for cryptocurrencies and blockchain technology.
Some municipalities and states such as Miami and Wisconsin have embraced the recent innovation, whereas regulators such as the newly-appointed SEC Chair Gary Gensler have critiqued the autonomy of the crypto industry.
With crypto ETFs and related financial products under intense scrutiny by the SEC, it remains to be seen whether Diem’s decision to relocate back to the United States will bear any fruit.
Featured image from ShutterStock