According to The Wall Street Journal, which cited an unknown source, The Diem Association, a Meta Platforms-led venture that was planning to launch a new, user-friendly stablecoin, is selling its technology to Silvergate Capital for $200 million.
Diem is currently negotiating with investment bankers to sell its intellectual property and find new jobs for the engineers who developed the technology.
Last year, Silvergate Capital and Diem agreed to collaborate on developing a stablecoin pegged to the U.S. dollar. The deal was expected to breathe fresh life into a dormant project that Meta Platforms had started under the name Libra in 2019 when Facebook was still known as Facebook.
The project's original ambition was for a stablecoin backed by a basket of fiat currencies that could be used as a medium of exchange around the world. It was met with instant international regulatory opposition, with politicians demanding that all development be halted until they could offer regulatory direction and assure that it did not jeopardise global financial stability.
In December 2020, Libra Association was renamed Diem to take a different strategy, but the effort continued to face challenges, including the resignation of key executives.
Silvergate would be the formal issuer of the Diem USD stablecoin and maintain the reserve supporting the token, while Diem Networks U.S. would administer the Diem Payments Network and register as a money services business with the Financial Crimes Enforcement Network (FinCEN).
The Federal Reserve, on the other hand, raised reservations about the idea and said it couldn't guarantee that it would be approved. Lawmakers also took a stand against Novi (previously Calibra), a Meta subsidiary intended with developing a Diem-compatible wallet, which announced a pilot programme with Paxos last November.