Mark Zuckerberg’s Meta Exits The Cryptocurrency Business

Facebook’s Meta (formerly Diem Association) cryptocurrency project, which was announced in 2019, is shut down, and all of its technology are transferred to Silvergate Capital, a small bank in California. According to the Wall Street Journal, which cites its own sources, this is true.

Meta’s Case

The project has been forced to close as a result of the displeasure of US regulators. Facebook’s project was an attempt to develop its own stablecoin cryptocurrency that was backed by national currencies and assets.

The concept of Facebook was endorsed by a number of significant financial institutions; however, when American regulators expressed concerns about the initiative, many companies withdrew their support.

The Diem Association is currently in discussions with investment bankers about how to best sell its intellectual property to third parties. Additionally, firm personnel are on the lookout for openings that will allow employees to be sent to other projects.

Meta owns a third of the company, with the other shares being shared among the association’s members, which include Andreessen Horowitz, Union Square Ventures, Uber, Shopify, and others.

Quick Overview

In an article published by Bloomberg, the Federal Reserve of the United States stated that it was placing pressure on Silvergate. This financial institution is a banking partner of the Diem Association, and it collaborated with that organization to create the cryptocurrency last year. Furthermore, in November 2021, the regulator stated that the issuer’s affiliation with a significant firm may result in an excessive concentration of economic power.

Diem’s situation has been known for some time now, and things are not going nicely for him. David Markus, the head of Meta’s payments section, announced his resignation at the end of November 2021. He spoke in support of the business’s cryptocurrency initiative before the United States Senate and was involved in the development of the Novi digital wallet, which was produced by the corporation.

Here is a brief history:

• In 2019, Facebook will introduce its own cryptocurrency, which will be called FbCoin.
• 2020 – The first official criticism from regulators, who were concerned that Libra could have an impact on the dollar/euro exchange rate or assist terrorist financing and financing.
• Facebook creates Libra in the year 2020. Libra will now be owned by a group of firms, rather than only Facebook, as was previously the case.
• 2020 – Members of the Senate wrote a letter to Facebook in which they demanded that the initiative be abandoned on the grounds that the business “cannot be trusted to control bitcoin.”
• 2021 – Diem declared that it will continue to issue a cryptocurrency, with Silvergate Bank serving as the issuer of the coin. Almost immediately after that, the Federal Reserve stated that it was unable to provide assurance to the bank.

Current Situation

As reported by The Verge, if Diem does decide to sell its assets, it will be a negative indication for the Meta project. Libra was originally meant to be backed by a number of different currencies, but regulators were not on board with the plan. After that, it was decided to link the Diem token to the US dollar, but this decision did not receive unanimous backing from the relevant regulatory bodies.

Meta was forced to change the name of the project to Diem Association and cut its stake in it to 75% of the total.

The Silvergate Capital bank was meant to be the one that issued the Meta coin in the first place. According to the Federal Reserve, however, after extensive negotiations with regulators, the bank came to the conclusion that the central bank could not guarantee permission for such actions.

As a result, the Diem project came to a grinding halt, and its leader, David Markus, was forced to resign from his position at Meta in 2020.

Diem is currently preparing to sell up its assets in order to restore funds to its investors, according to the company. Diem is also in the process of negotiations with investment bankers to sell its intellectual property, and it is attempting to hire the technical employees that worked on the project throughout this time.