Libra, which was once pinned high hopes by Facebook, has actually reached the brink of being sold.
According to people familiar with the matter, Facebook's crypto-stablecoin project Diem (formerly Libra) plans to sell for about $200 million to Silvergate, a bank that serves bitcoin and blockchain companies.
As a stablecoin project that has attracted the global attention, Diem has been ill-fated in the past two years, from the vision of changing the global payment system under the ecology of super social networks, to now having to be sold, we seem to really have to say goodbye to Diem.
Who is Silvergate?
Silvergate, which may take over Diem, is actually associated with cryptocurrencies. The name, which may be unfamiliar to most users, is an important partner of major U.S. cryptocurrency trading platforms.
Founded in 1988 as a Fed member bank, CEO Alan Lane discovered a gap in the market after buying his first bitcoin in 2013, and since 2013, Silvergate has been committed to providing innovative financial infrastructure solutions for the digital currency industry.
In addition to banking services, Silvergate's best-known service is the Silvergate Exchange Network (SEN), a 24/7 non-stop real-time payment platform. In the fourth quarter of 2021 alone, SEN processed more than $200 billion in transactions, with top institutions like Coinbase, FTX, Binance US, Circle, paxos, and others being users of SEN.
Even FTX's SBF has also highly praised Silvergate, saying that "the time that a crypto company has passed can be divided into pre-Silvergate stage and post-Silvergate stage, and how to describe Silvergate's transformation of blockchain companies' financial services is not exaggerated." SEN proves day after day that it is one of the key pillars of the cryptocurrency settlement layer."
On May 12, 2021, when the Diem Association announced that it had abandoned its plan to register with the Swiss financial regulator FINMA after a series of setbacks, and returned to the United States, it found Silvergate and announced a plan to cooperate with Silvergate: Silvergate will become the exclusive issuer of Diem's dollar stablecoin Dime USD.
In Facebook's view, working with a bank like Silvergate, which is both involved in the crypto field and a member of the Fed and subject to Fed regulation, is a high-quality option that can seek regulatory approval.
However, in November 2021, the U.S. Presidential Working Group on Financial Markets said in a report that cooperation between stablecoin issuers and wallet providers or commercial companies could lead to an excessive concentration of economic power, and this combination could have a detrimental impact on competition. They also worry that users of a stablecoin that is deeply involved by a giant tech company will face undue hurdles and costs when switching to a new stablecoin.
Therefore, Facebook can only choose to sign it.
Alternatives to Diem?
Losing Diem doesn't mean facebook has completely abandoned the direction of digital currency, and they still have an option in their hands - Novi wallet, which is the original Calibra. It can also be seen from the naming that Calibra is a wallet specially created for Libra, and now without Libra, the renamed Novi has completely abandoned its native genes and continued to carry Facebook's payment dream.
Despite the outcry over Facebook's data-abusing digital wallets, Facebook has high hopes for Novi, not only planning to let Novi provide people with a variety of financial services, but even acquiring Servicefriend, a customer service chatbot company, to improve the quality of service.
At the same time, Novi began to seek cooperation with compliant stablecoin issuers Circle and Paxos, and considered USING USDC or PAX as its own stablecoin. At the end of last year, Facebook's WhatsApp began testing cryptocurrency transfers in the chat interface for some users in the United States, and the tool was the Novi wallet.
For now, Novi is Facebook's last option on the cryptocurrency track, and in the future of their All in Metacosm, Novi may be able to help them regain their dreams of crypto payments.
Ill-fated Diem
Since the release of the white paper in June 2019, any news about Libra has been a hot topic, after all, this is the latest product of a super social network with nearly 3 billion users, and once successfully landed, the potential impact on users is immeasurable. In mid-2019, a period of dismal market sentiment, the news of Facebook's entry into cryptocurrencies also brought a booster to the market. Four days after the launch of Libra, Bitcoin once again stood at $10,000 after nearly a year. It then went all the way to its current peak of $14,000, and Bitcoin's total market capitalization soared from around $160 billion to $228 billion.
But unexpectedly, Libra debuted at its peak.
In the first edition of the white paper, Libra became a payment giant by referring to the global payment network in the form of a basket of currencies containing multiple fiat currencies.
Under this vision, investment institutions, blockchain, social media, communication companies, e-commerce, shared travel, non-profit organizations, music, travel, payment and other areas of super giants, such as Visa, Uber, eBay, Spotify, Coinbase and other familiar top companies have become Diem's partners, a super giant alliance is shining in Silicon Valley.
Lineup of partners when Libra was first introduced
But just when everyone imagined that Libra could change the payment landscape, the regulators did not come up, they did not recognize Facebook's ambitions, worried that Libra's status on the dollar, and even on the United States, especially Facebook, a giant that has been labeled "Internet bully". Not long ago, facebook leaked data and used data to manipulate the election, and regulators have scoffed at the once-proud giant.
So, within four months of Libra's launch, Congress held three hearings, and even Facebook founder Mark Zuckerberg had to attend the hearings himself to mediate tensions between the platform and regulators, but to no avail. Even though Zuckerberg sincerely told the regulator that Libra will have various KYC (user verification), user protection, and even said that Libra is protecting and enhancing the US dollar, the regulator does not think so. From the questions of the hearing, we can also see the anxiety of the regulator, as a company with a history of manipulating data, 3 billion people's payment data is handed over to you alone, who can rest assured?
Under regulatory pressure, PayPal, eBay and other partners withdrew from the super alliance, and Libra was forced to revise the white paper, first introducing the anchoring of a single stablecoin, then changing its name to Diem and anchoring only the US dollar to maximize compliance with regulatory requirements. In the end, it was another decline, and regulation failed to get Facebook to do so.
While Diem is still struggling to prop up the situation, the statement said that what he is doing is still a "huge and excellent opportunity". But in the mouths of people familiar with the matter, Diem is already a "zombie organization" that lives in name only. They have no chance of success, not really, just very small, too small to be negligible.
In September 2020, Diem Morgan Beller announced his departure; in March 2021, another Co-Creation Kevin Weil announced his departure; and at the end of 2021, David Marcus, head of the cryptocurrency program at Facebook's parent company Meta, also chose to leave. The encirclement and blockade of global regulation has caused these project leaders to retreat. The departure of the Elders also dimmed Diem's prospects.
Whether or not Facebook sells Diem to Silvergate, stablecoin-based payment systems no longer seem to be a priority for Facebook, and the metacosm is the new tool that Facebook is trying to turn the global scoff at the moment.
The vigorous global stablecoin project, which lasted 2 and a half years, is about to officially come to an end.
*Rhythm BlockBeats reminds investors to guard against chasing high risks, and the views expressed in this article do not constitute any investment advice.
--For more blockchain industry information, welcome to scan the code to visit the official website--