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Facebook’s cryptocurrency dream is over before it started

Published Feb 1st, 2022 9:33PM EST
bitcoin cryptocurrency news
Image: ulchik74/Adobe

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Facebook (now called Meta) wanted to launch its cryptocurrency in the summer of 2019. That’s when it announced the Libra payment initiative. Facebook wanted Libra to be a stablecoin, which is a token that has a stable, predictable value and does not experience volatility spikes like bitcoin and other cryptos. Facebook created a subsidiary and an association, both of which were supposed to help Libra distance itself from Facebook. But Libra saw strong opposition from governments immediately. This then forced Facebook to postpone the launch of Libra and eventually rebrand it. Fast-forward to late January 2022, and Facebook’s Diem cryptocurrency stablecoin is history.

The next time we see the Diem stablecoin show up, it won’t have anything to do with the social media giant. However, that doesn’t mean Facebook has given up on plans to incorporate cryptocurrencies into its products.

Diem CE Stuart Levey issued a statement on Monday detailing the sale of the Diem cryptocurrency. The Diem Association sold everything related to the Diem Payment Network to Silvergate Capital Corporation. The reported price is around $200 million.

Diem cryptocurrency’s future

The exec acknowledged in the press release that the Diem cryptocurrency would have had no future under Facebook:

Despite giving us positive substantive feedback on the design of the network, it nevertheless became clear from our dialogue with federal regulators that the project could not move ahead. As a result, the best path forward was to sell the Diem Group’s assets, as we have done today to Silvergate.

Levey praised the Diem cryptocurrency in the announcement, hinting that the Diem technology might have a future in the crypto market:

One of our highest priorities in designing the Diem Payment Network was building in controls to protect it against misuse by illicit actors. We addressed that concern in ways that are novel in the industry, implementing numerous controls that were recognized as innovative by regulators. Among these controls was a prohibition on anonymous transactions, which pose both a sanctions and money laundering risk.

As we undertook this effort, we actively sought feedback from governments and regulators around the world, and the project evolved substantially and improved as a result. In the United States, a senior regulator informed us that Diem was the best-designed stablecoin project the US Government had seen.

That said, it’s unclear what Silvergate plans to do with Diem.

The metaverse, Novi, and NFTs

Facebook rebranded to Meta last year as Mark Zuckerberg wants to pivot his social media empire to the so-called metaverse. It all happened during a massive Facebook scandal. Therefore the name change should have helped Facebook get rid of its bad reputation.

The metaverse is a somewhat utopian future of the internet experience. The idea is that people will use virtual and augmented reality social experiences for both work and entertainment. Nevertheless, the metaverse is one place where cryptocurrencies can thrive, including stablecoins like Diem. Zuckerberg & Co. might have decided to abandon the Diem cryptocurrency, but they’re not out of the crypto business.

Recently, we heard that Facebook and Instagram are looking to incorporate NFT support in the social experience. Twitter already beat them to it. Adding NFT support to social networks involves technology that allows users to interact with the blockchain. Setting up a marketplace for users to sell or buy NFTs could be a lucrative deal for Facebook. You don’t need to own your own crypto for that.

Finally, there is one other piece of cryptocurrency tech that’s related to the Diem initiative. That’s the Novi wallet that Facebook owns. Novi supports the transfer of money via WhatsApp, although that’s just a pilot program. However, Novi might have a future in Facebook’s broader crypto strategy, including the metaverse and NFTs.

Chris Smith Senior Writer

Chris Smith has been covering consumer electronics ever since the iPhone revolutionized the industry in 2008. When he’s not writing about the most recent tech news for BGR, he brings his entertainment expertise to Marvel’s Cinematic Universe and other blockbuster franchises.

Outside of work, you’ll catch him streaming almost every new movie and TV show release as soon as it's available.