Diem is dead. It’s official. Mark Zuckerberg’s Meta (formerly Facebook) has announced that it has sold the Diem intellectual property to Silvergate Capital, effectively killing off the Meta stablecoin project.
Diem CEO Stuart Levey announced the news on 31 January 2022 citing “regulatory challenges” and noting that discussions with federal regulators had not lead to a breakthrough with regards to dealing with many of their concerns, such as money laundering and user anonymity, and therefore that the best way forward was for the company to sell its assets.
The agreement between the two companies shows that Silvergate issued over 1.2 Million Class A common stock shares to Diem, and paid $50M in cash, making the aggregate value of the deal to be somewhere around $180M.
Diem will start wining down its operations immediately, with the expectation of completion in the coming weeks.
We remain confident in the potential for a stablecoin operating on a blockchain designed like Diem’s to deliver the benefits that motivated the Diem Association from the beginning. With today’s sale, Silvergate will be well-placed to take this vision forward.Diem CEO Stuart Levey
Diem is Dead? Not quite.
It now looks as though Silvergate will be looking to use the IP to move forward with its own stablecoin rollout later in 2022, saying that the company had identified a need for a scalable and regulated cryptocurrency which can peg to the US Dollar, and that the acquisition of the Diem Intellectual Property would help it to keep it’s promise to launch a product allowing users to seamlessly move money. You can read the whole press release from Silvergate here.
In the digital asset industry, money moves across the globe around the clock. Through conversations with our customers, 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. As previously stated on our Q4 2021 earnings call, it remains our intention to satisfy that need by launching a stablecoin in 2022, enabled by the assets we acquired today and our existing technology.
We are grateful to Diem and the community of engineers and developers who created this technology and have advanced it to its current evolution. Silvergate is committed to continuing to foster the open-source community that supports the technology, and we believe that existing contributors will be excited about our vision going forward.Silvergate CEO Alan Lane
According to its own press releases, Silvergate Capital Corporation is a provider of innovative financial infrastructure solutions and services for the growing digital currency industry. The Company’s real-time payments platform, known as the Silvergate Exchange Network (SEN), is at the heart of its customer-centric suite of payments, lending and funding solutions serving an expanding class of digital currency companies and investors around the world.