Meta (formerly Facebook) has had a lot of trouble over the past few years. The company has been dealing with allegations of mishandling customer data and has struggled to revamp its image with the general public.
Amid a major rebrand and renewed focus on the metaverse, Meta has finally given the final death knell to its planned stablecoin, Diem.
Meta Finally Throws The Towel
Earlier this month, Stuart Levey, the chief executive of Meta's Diem stablecoin project, announced that the company is shutting down the project and selling off its assets to the Silvergate Capital Corporation - a holding company and financial services organization.
As Levey explained, the Diem Association and subsidiaries will begin winding down operations in the coming weeks.
While the Association remains confident in their vision, they understand things might not pan out. The hope is that Silvergate will help make the dream a reality, and this hope is what instigated the sale.
Under the terms of the deal, Silvergate will purchase all of Diem's assets for a total of $182 million. The bank claimed it plans to incur about $30 million in additional costs as it integrates the acquired assets into its existing technology suite.
Silvergate said it would integrate Diem's assets into its payment platform - the Silvergate Exchange Network. With Diem coming onboard, Silvergate hopes to launch a "next-generation global payment solution" that will increase customers' speed, functionality, and cost savings.
Alan Lane, Silvergate's chief executive, explained:
"We identified a need for a U.S. dollar-backed stablecoin that is regulated and highly scalable to further enable them to move money without barriers. It remains our intention to satisfy that need by launching a stablecoin in 2022."
What Could Have Been
Meta's road has been a challenging one to say the least. The company first announced Diem in June 2019, the asset called "Libra" at the time. When Meta launched Libra, it billed the coin as a stablecoin backed by a basket of currencies - creating a stable price that avoids the volatility of traditional cryptocurrencies.
The objective was to create an asset that would allow anyone in the world to send money easily. Meta planned to integrate its coin into all its services - Facebook, WhatsApp, Instagram, even the Messenger app. Platforms would accept Libra for payments and process them efficiently, bringing a new meaning to payment ease.
Meta also had an enviable cast of supporting institutions. All under the Libra Association, Meta's partners included Silvergate, Coinbase, Stripe, Uber, Mastercard, Mercado Libre, and many more. Each paid $10 million to be a part of the Association, their participation ensuring a solid base for proper rollout of Meta's asset.
Problems From the Onset
Many in the tech space were thrilled that Meta was stepping into crypto, but the excitement turned sour. Days after announcing the coin, Meta was hit with detractors.
Congress was first in line, both the Senate and House of Representatives inviting executives at Meta for several hearings. The hearings were pretty damning, Meta's history of privacy indiscretions continually popping up.
Foreign regulators and lawmakers started pushing back on Libra as well. Thus began the defensive position that Meta would never recover from.
Despite a rebrand from Libra to "Diem" in 2020, Meta was still unable to make significant progress with lobbying and convincing regulators to allow the coin launch. Meanwhile, the Diem Association started losing members one after the other. Meta was in a race against time and never caught up.
That said, the company was able to record some milestones. Last December, Meta began testing its digital wallet - Novi - for WhatsApp users in a few locations. These tests provided hope that Diem could still launch, but to no avail.
Looking Towards the Future
Now that Meta is done with Diem, it's worth noting what the company has left. It is stalling all of the stablecoin's assets to Silvergate Bank, and the latter will most likely examine how it could still make the stablecoin project work.
As for Meta, the focus remains the same - building an expansive metaverse where everyone can enjoy immersive experiences. The company hoped to integrate Diem into its suite of products, but that dream is no more than that - a dream.