Facebook-Led Digital Currency Pivots to US Dollar Stablecoin

Diem is moving its operations to Washington, DC, and the Diem Payments Network will register with the Financial Crimes Enforcement Network (FinCEN) as a money services business.

article-image

Source: Shutterstock

share

key takeaways

  • The Facebook-initiated digital currency project Diem will partner with Silvergate Bank to launch a stablecoin pegged to the dollar
  • The project, formerly known as Libra, rebranded to Diem in December in anticipation of a 2021 launch

The Facebook-initiated digital currency project Diem has said it will shift its operations to the US and partner with Silvergate Bank to launch a stablecoin pegged to the dollar.

The project, formerly known as Libra, rebranded to Diem in December in anticipation of a 2021 launch. It has been working to change its vision and strategy since it was first introduced in 2019, when it was met with hostility from global regulators who opposed a new corporate-issued private currency that would compete with government-issued currency.

“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,” Stuart Levey, chief executive officer of Diem, said in a statement Wednesday.

Moving operations

Diem was formerly based in Geneva, Switzerland and was seeking a license from the Swiss Financial Markets Authority. Now, it’s moving its operations to Washington, DC and the Diem Payments Network will register with the Financial Crimes Enforcement Network (FinCEN) as a money services business.

The crypto-friendly Silvergate Bank will issue the Diem stablecoin and manage the dollar reserve backing it.

Before Facebook formally announced Libra in 2019, the social media giant had already faced pushback from lawmakers over its handling of consumer data and privacy. Facebook CEO Mark Zuckerberg and head of Novi (Facebook’s digital wallet, which also underwent a rebranding, from Calibra) David Marcus had repeatedly assured critics the project would not move forward until U.S. regulators’ concerns were satisfied. As a result, the idea of Diem had morphed and its development seemed to come to a halt until recently. 

Diem Association disassociation

The Diem Association, the consortium of businesses and nonprofit organizations that govern the digital currency, initially launched with 28 members. Not long after the backlash, many of its most prominent members, including PayPal, Visa and Mastercard, withdrew

Since then, PayPal has launched a business division dedicated to crypto, Mastercard has said it will support certain digital assets for settlement on its network this year and Visa has established a pathway for digital currency settlement in the stable coin USDC.

For many companies in the business of digital assets (building wallets, applications and leveraging cryptocurrency networks in other ways) there’s a big and frequent issue whenever they try to settle payments: banks require they be settled in fiat, forcing companies to convert their digital currency to fiat and take on the fees that come with that.

Stablecoins are designed to minimize the volatility of other digital assets. They provide an intersection point between cryptocurrency networks and the fiat payment networks and allow for cross-network settlements. 

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 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

Unlocked by Template (10).png

Research

Innovations on Aptos’ technical design through Raptr, Shardines, and Zaptos approach near-optimal latency and throughput by unlocking 100% utilization of network resources, with the capacity to settle 260k transactions per second with latencies less than 800ms. The original Move language was revamped with the launch of Move 2, supporting more expressivity in smart contract logic and a scalable ability to interact with high volume datasets. The ecosystem has benefitted from strong asset inflows, now hosting over $1.3B in stablecoins, $450M in bridged BTC, and $530M in RWAs. Activity in the Aptos ecosystem has grown notably over the past year, with monthly application revenue reaching ~$835k and monthly DEX volumes growing to over $5B, both at new all time highs.

article-image

Interchain Labs will focus on sovereign L1s and institutional demand, abandoning plans for smart contracts on the Cosmos Hub

article-image

Also, only three tokens have outperformed bitcoin so far this year: XMR, HYPE and SKY

article-image

The fund group has submitted proposals in recent months for other funds that would hold litecoin, solana, XRP, HBAR, Sui and others

article-image

Momentum’s back — BTC leads, risk assets follow

article-image

Ondo Finance’s acquisition of blockchain development company Strangelove follows its buy of Oasis Pro

article-image

Cryptocurrency and stock traders alike had a lot to unpack Wednesday