Diem, a Facebook-backed digital currency venture, is relocating its activities from Switzerland to the United States and announced that it is preparing to develop a digital currency linked to the US dollar later this year 2021.
Diem has announced that it is dropping its request for a payment device authorization from the Swiss Financial Markets Authority, which it has been unable to obtain so far.
The Diem Association, which has Facebook and 25 other firms, announced on Wednesday that it has teamed up with Silvergate Capital Corp. to launch a “stablecoin” linked to the US dollar. Stablecoins are digital currencies that are linked by real-world properties like national currencies or commodities.
Stablecoins, as the name suggests, are intended to have a consistent value. This is in marked contrast to digital currencies such as Bitcoin, whose price is irrelevant to any real-world currency and has fluctuated between $9,000 and $63,000 in the last year.
In 2019, Facebook unveiled the Libra project, which was envisioned as a stablecoin built on a set of national currencies at the time. Due to legislative and economic pressure, the initiative has been significantly scaled down since then. In December 2020, the company changed its name.
Diem’s initial plans to become a digital currency for the unbanked worldwide have been scaled down once again, as the company focuses on the United States.