Is Facebook’s Diem Stablecoin Falling Apart?

Meta’s Diem Association is reportedly seeking to sell off its assets in an attempt to pay back its investors

article-image

Source: Blockworks

share

key takeaways

  • Meta’s Diem Association, formerly known as Libra, has been plagued by regulatory and social backlash
  • The association n is seeking to sell assets to pay back investors, sources familiar with the matter reportedly say

Meta’s (formerly Facebook) “Diem” stablecoin cryptocurrency project seems to be crumbling after years of social and regulatory pressures, Bloomberg reported. The project, formerly known as Libra, is reportedly seeking to sell its assets in order to return capital to investors and association members.

[stock_market_widget type=”accordion” template=”chart” color=”#5679FF” assets=”FB” start_expanded=”false” display_currency_symbol=”true” api=”yf” chart_range=”1mo” chart_interval=”1d”]

Facebook’s Libra cryptocurrency was slated to launch in 2019, but backlash from regulators forced the association to hold off until it received appropriate approvals. In October 2019, several companies, including PayPal, eBay, Mastercard and Stripe, left the Libra Association, increasing doubt that the project would ever work.

In a statement from 2019, PayPal noted why it was leaving the project:

“PayPal has made the decision to forgo further participation in the Libra association at this time and to continue to focus on advancing our existing mission and business priorities as we strive to democratize access to financial services for underserved populations.”

Since then, PayPal has made its own entry into the cryptocurrency space, letting its users buy, sell and hold cryptocurrency on its platform.

Concern over the Diem project stemmed from both Facebook’s history with data and also the fact that Libra would be a permissioned and private system that could potentially undermine existing monetary systems should it become popular.

After so much backlash from regulators, the Libra Association changed its name to the Diem Association in 2020, just as Facebook would later change its name to Meta after becoming synonymous with unethical data practices.

The new version of Diem would also depart from its prior concept of a stablecoin backed by the International Monetary Fund’s SDR, a basket of top currencies including USD, EUR, CNY, JPY and GBP, and instead use a USD-only backed stablecoin issued by a major bank. But Diem couldn’t seem to shake the regulatory and social pressures.

To add more uncertainty to the project, Diem’s head David Marcus, announced his departure from Meta and Diem through a series of Tweets in November of last year.

Loading Tweet..

Sources say that it is unclear whether or not Diem will find a buyer for its assets, a third of which is owned by Meta.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

kamino cover.jpg

Research

Kamino has solidified its position as the leading money market on Solana and is emerging as a DeFi bluechip. Although DeFi competition is fierce, Kamino has kept iterating on its product to provide the best-in-class UX, paired with a robust risk management framework and battle-tested infrastructure. Given the rollout of Kamino Lend V2, the protocol may scale aggressively over the coming months, penetrating previously untapped markets in Solana DeFi.

article-image

Why that the bull market might not start until 2025

article-image

August’s annual headline figure came in at 2.3% after an upward revision Thursday, so things are moving in the right direction 

article-image

MSTR’s stock price was roughly $248 at 2 pm ET Thursday

article-image

Ever since rates came off zero and fiscal deficits exploded, markets have started paying close attention to how the government is funding itself

article-image

Solana memecoins are collectively at an all-time high

article-image

Optimistic rollups like Optimism, Arbitrum and Base are seeing rapid adoption relative to zk rollups