Mark Zuckerberg once tried to protect the contentious cryptocurrency project in front of Congress is collapsing due to regulatory tension. The Wall Street Journal reported on Wednesday that Meta Platforms Inc’s digital currency venture Diem Association is drawing to a close and going to sell its technology to California-based Silvergate Capital Corp for about $200 million, quoting a person familiar with the matter.
According to people who asked not to be identified because the talks are private, Diem is in words with investment bankers about how to better sell its intellectual property and provide a new life for the engineers who developed technology in order to cash out whatever value remains in its once-ambitious Diem coin venture.
When Meta’s Facebook first announced the concept of stable digital currencies
Stablecoins to revolutionize the world’s financial services in 2019, they did so in collaboration with dozens of other companies. However, the alliance was insufficient to shield the initiative from global legal scrutiny. After Zuckerberg was compelled to testify, some of the project’s stakeholders dropped out, and the company was renamed Diem.
A subsequent setback occurred when Facebook’s fintech executive David Marcus, supervising the company’s initiatives to advance Diem, left to work on something novel.
Diem announced in May that Silvergate Bank, a joint venture of the company, would be the acquirer of the Diem USD stablecoin, a type of cryptocurrency pegged to the US dollar that is generally used to transact other cryptocurrencies. According to the folks, after a lengthy up-down between Diem supporters and regulators, Fed officials ended up telling Silvergate last summer that the organization was uncomfortable with the plan and could not guarantee the bank that it would permit such activity.
At the outset of its operations, the franchisee welcomed well-known names such as PayPal Holdings Inc, Visa Inc, and Stripe Inc, all of which backed out as problems hung. To defend the project, Zuckerberg appeared before Congress in 2019 to answer questions about the cryptocurrency’s legitimacy.
The company had decided to rename the currency in 2020 and had hired US Treasury official Stuart Levy as CEO. According to one of the people, Meta owns about a third of the venture, and association members hold the rest. When the group was formed, members, including venture capital firms and technology companies, agreed to invest and pay to join.
Crypto doom erases greater than $1 trillion capital year after year
Thousands of People who leapt into virtual currency investing in the last 2 years in the wish of a spacewalk to instant fortune are now faced with a parallel reality: Costs for cryptocurrencies, ranging from comparative stalwarts like bitcoin and Ethereum to much more extravagant tokens, have plummeted since achieving all-time peaks in early November, erasing out an astounding $1.35 trillion in world gross domestic product, or nearly 50 percent market, as per CoinMarketCap.
IRS special agents acknowledge Facebook is opening doors for crypto and NFT fraud
According to IRS studies, cryptocurrencies accounted for 93 percent of all seized assets by the authority in 2021. Surprisingly, Facebook and Twitter’s social media sites have lately expanded their business to NFTs.
The IRS received 80 cases involving cryptocurrency in 2021 alone.
Advocates claim Facebook will launch its NFT marketplace in the coming days.
The IRS has monitored a substantial upsurge in the use of cryptocurrencies and non-traditional financial instruments (NFTs). Amongst many other illegal activities, digital currencies are being used for manipulation, fraud, and tax evasion. To stay on top of criminals, agents are now being educated in cryptocurrency.
The Bottom Line
Stablecoins have elicited conflicting reactions in recent years. Throughout December, the United States Senate Banking Committee held a hearing on stablecoin regulation, with several senators expressing hesitancy over incorporating dollar-pegged digital currencies into the broader economy. Lately, a group of US banks suggested a new USDF stablecoin to get a more reliable stablecoin option for US customers.
While Facebook’s Diem stablecoin was a failure, forthcoming private stablecoins may fare much better as policymakers become more supportive of the idea of digital money.
