Diem Association, the Facebook-backed digital currency project, has partnered with cryptocurrency-friendly bank Silvergate to launch USD pegged stablecoin.
It has been reported that Diem announced a new model of its upcoming stablecoin, relocating its main operations from Switzerland to the United States and withdrawing its application for a payment system license from the Swiss Financial Markets Authority.
However, the association, which comprises 26 financial firms including Nasdaq-listed cryptocurrency exchange Coinbase, is now planning to move forward with its USD stablecoin plans through Silvergate Bank, which is set to be the issuer of the Diem USD and will manage the Diem USD reserve.
The report said that Diem Networks US, Diemâs wholly-owned subsidiary, will run the Diem Payment Network, a permissioned blockchain-based payment system facilitating Diem stablecoin transactions. While Silvergate is a California state-chartered bank and a member of the Federal Reserve, Diem Networks US is seeking to register as a money services business with the US Department of the Treasuryâs Financial Crimes Enforcement Network.
He added:
âWe believe in the future of U.S. dollar backed stablecoins and their potential to transform existing payment systems,â Silvergate CEO Alan Lane said. âWeâre inspired by Diemâs technology and commitment to building a regulatory compliant payment system that offers a safe and secure way to move money.â
Stuart Levey, the CEO of Diem, said:
âWhile our plans take the project fully within the U.S. regulatory perimeter and no longer require a license from FINMA, the project has benefited greatly from the intensive licensing process in Switzerland.â
Earlier, Facebook released a white paper for its Libra cryptocurrency in June 2019, originally planning to peg the digital currency to several fiat currencies including the US dollar, the euro, the Japanese yen, the British pound, and the Singapore dollar.
Due to global regulatory pushback, the Facebook-backed Libra Association has been struggling to launch its stablecoin ever since, eventually rebranding to the Diem Association in an apparent renewed effort to launch the digital currency.
The news comes shortly after Facebook CEO Mark Zuckerberg apparently hinted at being a Bitcoin holder earlier this week, announcing that two of his pet goats were named âBitcoinâ and âMax.â
Thus, some crypto industry observers including CryptoQuant CEO Ki Young Ju subsequently suggested that the move could be a sign of soon-to-come announcements of Bitcoin (BTC) purchases from companies like Facebook.
We may see a series of announcements of $BTC purchases from institutions like @Facebook soon. Institutions have been accumulated $BTC in $48-60k range since February. Approx. 154k Bitcoins has flowed out from Coinbase into multiple cold wallets. Chartđhttps://t.co/20Dz85Y5mG https://t.co/74Us7S98xx pic.twitter.com/hZqQ5aTPes â Ki Young Ju 죟기ě (@ki_young_ju) May 11, 2021
Source: Cointelegraph