The Diem Association, formerly known as Facebook Inc.’s Libra, plans to abandon a Swiss launch as it shifts focus to its operations in the United States. The Diem Association, which oversees the development of the Diem digital currency, had been pursuing a payment system license with Switzerland’s FINMA watchdog.
The Diem Association, which comprises of 26 financial firms and non-profits, announced it was relocating its main operations from Switzerland to the United States and withdrawing its payment system license application with FINMA. The digital currency group’s U.S. subsidiary has partnered with Silvergate, a California state-chartered bank, to issue the token.
Diem Networks U.S., which is a unit of the Diem Association, will run a blockchain-based payment system that allows real-time transfer of Diem stablecoins and will register as a money services business with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network, the group announced.
“We are committed to a payment system that is safe for consumers and businesses, makes payments faster and cheaper,” the association said.
The Diem Association said it plans to move its operational headquarters from Geneva to Washington, D.C. where the digital currency group’s U.S. unit is based.
Following Diem’s announcement to abandon plans to acquire a Swiss license, FINMA said Diem’s application had been at the “advanced stage” but that the group now planned to launch from its home grounds.
Diem Association’s short-lived life of (only) regulatory hiccups
It would be an understatement to say that Facebook’s digital currency venture has only met setbacks since it was announced in June 2019. The Libra Association lost partners including eBay, Mastercard, Mercado Page, Stripe, and Visa barely six months after its much-anticipated launch. Around the same time, Facebook’s Libra was blocked in France and Germany. Then French Minister of the Economy and Finance, Bruno Le Marie, warned that the controversial cryptocurrency won’t be permitted in France as it would put national security and sovereignty of the government at risk.
Le Marie, an outspoken opponent of the cryptocurrency, believes the digital cryptocurrency threatens to undermine the euro and destabilize the entire French economy.
Facebook’s digital currency venture has only faced slammed doors from governments and central banks around the globe. Policymakers believe the cryptocurrency will spur money laundering and financing of terrorism.
In April 2020, Libra and its partners abandoned plans to hold a slew of currencies in favor of stablecoins backed by major currencies and sought the Swiss regulator’s approval. In December, Libra rebranded as Diem in a bid to earn regulatory approval by stressing the project’s independence.
Even a name change couldn’t stop the delays or hiccups as we can see from today’s announcement.