Facebook-led stablecoin consortium, the Diem Association has confirmed on Monday that it is selling its assets to Silvergate Bank, thus making an exit from the ambitious cryptocurrency project.
“Over the coming weeks, the Diem Association and its subsidiaries expect to begin the process of winding down, but we look forward to seeing the design choices – and the ideals – of Diem thrive,” said Stuart Levey, Diem Network US CEO.
Silvergate will purchase development, deployment and operations infrastructure, along with the tools for running a blockchain-based payment network that can facilitate payments for commerce and cross-border remittances. The California bank will further acquire proprietary software elements that are necessary to run a
stablecoin
Stablecoin
Unlike other cryptocurrencies like Bitcoin and Ethereum, stablecoins are cryptocurrencies that have been designed to keep a stable value. Placing a greater emphasis on stability over volatility can be a huge draw for some investors. Many individuals can be turned off from large swings and uncertainty presented by cryptos relative to other traditional assets.Stablecoins control for this volatility by being pegged to another cryptocurrency, fiat money, or to exchange-traded commodities, including gold, silver, or others. Advantages of StablecoinsOf note, stablecoins redeemable in currency, commodities, or fiat money are also said to be backed, whereas those tied to an algorithm are not considered to be so.There are several advantages of asset backed crypto. First, these coins are stabilized by assets that fluctuate outside of the crypto space, that is. This can help mitigate the financial risk associated with these assets.For example, Bitcoin and altcoins are highly correlated, so that cryptocurrency holders cannot escape periodic price falls. Stablecoins control for this vulnerability, allowing for the diversification of risk in a portfolio.Stablecoins also possess a mechanism for redeeming the asset backing them. This grants an additional level of confidence associated with the coin and are unlikely to drop below the value of the underlying physical asset, due to the effects such as arbitrage.For example, fiat-pegged coins are coins that are tied to a specified amount of fiat currency, usually on a one-to-one ratio (i.e.1 StablecoinX = $1). The companies that issue these currencies must have fiat reserves in the equivalent amount of the stablecoins they have issued.Crypto-pegged stablecoins constitute coins that are tied to a specified amount of another cryptocurrency, such as Bitcoin or Ethereum. Algorithmic stablecoins use supply-and-demand to automatically maintain a stable value.
Unlike other cryptocurrencies like Bitcoin and Ethereum, stablecoins are cryptocurrencies that have been designed to keep a stable value. Placing a greater emphasis on stability over volatility can be a huge draw for some investors. Many individuals can be turned off from large swings and uncertainty presented by cryptos relative to other traditional assets.Stablecoins control for this volatility by being pegged to another cryptocurrency, fiat money, or to exchange-traded commodities, including gold, silver, or others. Advantages of StablecoinsOf note, stablecoins redeemable in currency, commodities, or fiat money are also said to be backed, whereas those tied to an algorithm are not considered to be so.There are several advantages of asset backed crypto. First, these coins are stabilized by assets that fluctuate outside of the crypto space, that is. This can help mitigate the financial risk associated with these assets.For example, Bitcoin and altcoins are highly correlated, so that cryptocurrency holders cannot escape periodic price falls. Stablecoins control for this vulnerability, allowing for the diversification of risk in a portfolio.Stablecoins also possess a mechanism for redeeming the asset backing them. This grants an additional level of confidence associated with the coin and are unlikely to drop below the value of the underlying physical asset, due to the effects such as arbitrage.For example, fiat-pegged coins are coins that are tied to a specified amount of fiat currency, usually on a one-to-one ratio (i.e.1 StablecoinX = $1). The companies that issue these currencies must have fiat reserves in the equivalent amount of the stablecoins they have issued.Crypto-pegged stablecoins constitute coins that are tied to a specified amount of another cryptocurrency, such as Bitcoin or Ethereum. Algorithmic stablecoins use supply-and-demand to automatically maintain a stable value.
Read this Term network.
The official announcement has further detailed that Diem’s network is already in its pre-launch phase.
“Through conversations with our customers, we identified a need for a U.S. dollar-backed stablecoin that is regulated and highly scalable to further enable them to move money without barriers,” Alan Lane, Silvergate Bank’s CEO, said.
For the acquisition, Silvergate has issued 1,221,217 shares of class A common stock to Diem and paid an additional $50 million in cash, thus taking the total value of the consideration to almost $182 million.
A Controversial Project
Launched in mid-2019, Diem, then known as
Libra
Libra
Libra is a yet-to-be-released cryptocurrency proposed by Facebook, Inc., that will aim to serve as a global payment system and a stable financial infrastructure that people across the world can use. The projected release date of the libra cryptocurrency is currently slated for 2020, while the project is currently being managed by the Libra Association.Headquartered from Geneva, Switzerland, the Libra Association main purpose is founded on three pillars.This includes the provision of a framework of governance oversight for the Libra network and Libra reserve, overseeing active operations and longevity of the Libra payment system, and facilitating the flow of services of the Libra Blockchain.The Libra Association is overseen by the Libra Association Council.This is comprised of organizations from the technology, telecommunication, payment, blockchain, venture capital, and nonprofit sectors.The creators of the coin are Morgan Beller, who initially started working on cryptocurrency and blockchain technology at Facebook in 2017, David Marcus, and Kevin Weil. Before the announcement of the Libra cryptocurrency on June 18th, 2019, Facebook had been considering coining the digital currency GlobalCoin or Facebook Coin.Will Libra Ever Launch? Facebook has expressed multiple times that they will not launch the Libra cryptocurrency until all regulatory matters have been met.Facebook CEO Mark Zuckerberg has since assured lawmakers that Libra would not launch without first acquiring approval from United States regulators. Past participants of the Libra Association who left in October of 2019 include PayPal, eBay, Book Holdings, Mercado Pago, Visa, Stripe, and MasterCard. It should be noted that the source code for Libra is written in Rust that is open-source through the Apache License. What’s unique about Libra is that it will not depend upon cryptocurrency mining while only members of the Libra Association will be in a position to validate and process transactions. Facebook plans to launch a digital wallet known as Calibra in 2020, which will serve as an avenue for acquiring Libra along with Facebook Messenger and WhatsApp.
Libra is a yet-to-be-released cryptocurrency proposed by Facebook, Inc., that will aim to serve as a global payment system and a stable financial infrastructure that people across the world can use. The projected release date of the libra cryptocurrency is currently slated for 2020, while the project is currently being managed by the Libra Association.Headquartered from Geneva, Switzerland, the Libra Association main purpose is founded on three pillars.This includes the provision of a framework of governance oversight for the Libra network and Libra reserve, overseeing active operations and longevity of the Libra payment system, and facilitating the flow of services of the Libra Blockchain.The Libra Association is overseen by the Libra Association Council.This is comprised of organizations from the technology, telecommunication, payment, blockchain, venture capital, and nonprofit sectors.The creators of the coin are Morgan Beller, who initially started working on cryptocurrency and blockchain technology at Facebook in 2017, David Marcus, and Kevin Weil. Before the announcement of the Libra cryptocurrency on June 18th, 2019, Facebook had been considering coining the digital currency GlobalCoin or Facebook Coin.Will Libra Ever Launch? Facebook has expressed multiple times that they will not launch the Libra cryptocurrency until all regulatory matters have been met.Facebook CEO Mark Zuckerberg has since assured lawmakers that Libra would not launch without first acquiring approval from United States regulators. Past participants of the Libra Association who left in October of 2019 include PayPal, eBay, Book Holdings, Mercado Pago, Visa, Stripe, and MasterCard. It should be noted that the source code for Libra is written in Rust that is open-source through the Apache License. What’s unique about Libra is that it will not depend upon cryptocurrency mining while only members of the Libra Association will be in a position to validate and process transactions. Facebook plans to launch a digital wallet known as Calibra in 2020, which will serve as an avenue for acquiring Libra along with Facebook Messenger and WhatsApp.
Read this Term, was initially planned for launch within a year. But the project faced regulatory headwinds due to Facebook’s tainted reputation with data and also concerns over a financial impact of a private currency.
The stablecoin project saw an exodus of its initial partners within months, and Facebook CEO Mark Zuckerberg was also forced to testify in front of the US Congress. To move away from all the controversies, the project even rebranded and changed the architecture of its stablecoin.
Silvergate Bank, which is known for its crypto-friendly policies, was already working with Diem. Both the organizations earlier tied for the launch of a USD-pegged stablecoin, but that did not receive a regulatory green light.
“In the United States, a senior regulator informed us that Diem was the best-designed stablecoin project the US Government had seen,” Diem’s Levey added. “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.”
Facebook-led stablecoin consortium, the Diem Association has confirmed on Monday that it is selling its assets to Silvergate Bank, thus making an exit from the ambitious cryptocurrency project.
“Over the coming weeks, the Diem Association and its subsidiaries expect to begin the process of winding down, but we look forward to seeing the design choices – and the ideals – of Diem thrive,” said Stuart Levey, Diem Network US CEO.
Silvergate will purchase development, deployment and operations infrastructure, along with the tools for running a blockchain-based payment network that can facilitate payments for commerce and cross-border remittances. The California bank will further acquire proprietary software elements that are necessary to run a
stablecoin
Stablecoin
Unlike other cryptocurrencies like Bitcoin and Ethereum, stablecoins are cryptocurrencies that have been designed to keep a stable value. Placing a greater emphasis on stability over volatility can be a huge draw for some investors. Many individuals can be turned off from large swings and uncertainty presented by cryptos relative to other traditional assets.Stablecoins control for this volatility by being pegged to another cryptocurrency, fiat money, or to exchange-traded commodities, including gold, silver, or others. Advantages of StablecoinsOf note, stablecoins redeemable in currency, commodities, or fiat money are also said to be backed, whereas those tied to an algorithm are not considered to be so.There are several advantages of asset backed crypto. First, these coins are stabilized by assets that fluctuate outside of the crypto space, that is. This can help mitigate the financial risk associated with these assets.For example, Bitcoin and altcoins are highly correlated, so that cryptocurrency holders cannot escape periodic price falls. Stablecoins control for this vulnerability, allowing for the diversification of risk in a portfolio.Stablecoins also possess a mechanism for redeeming the asset backing them. This grants an additional level of confidence associated with the coin and are unlikely to drop below the value of the underlying physical asset, due to the effects such as arbitrage.For example, fiat-pegged coins are coins that are tied to a specified amount of fiat currency, usually on a one-to-one ratio (i.e.1 StablecoinX = $1). The companies that issue these currencies must have fiat reserves in the equivalent amount of the stablecoins they have issued.Crypto-pegged stablecoins constitute coins that are tied to a specified amount of another cryptocurrency, such as Bitcoin or Ethereum. Algorithmic stablecoins use supply-and-demand to automatically maintain a stable value.
Unlike other cryptocurrencies like Bitcoin and Ethereum, stablecoins are cryptocurrencies that have been designed to keep a stable value. Placing a greater emphasis on stability over volatility can be a huge draw for some investors. Many individuals can be turned off from large swings and uncertainty presented by cryptos relative to other traditional assets.Stablecoins control for this volatility by being pegged to another cryptocurrency, fiat money, or to exchange-traded commodities, including gold, silver, or others. Advantages of StablecoinsOf note, stablecoins redeemable in currency, commodities, or fiat money are also said to be backed, whereas those tied to an algorithm are not considered to be so.There are several advantages of asset backed crypto. First, these coins are stabilized by assets that fluctuate outside of the crypto space, that is. This can help mitigate the financial risk associated with these assets.For example, Bitcoin and altcoins are highly correlated, so that cryptocurrency holders cannot escape periodic price falls. Stablecoins control for this vulnerability, allowing for the diversification of risk in a portfolio.Stablecoins also possess a mechanism for redeeming the asset backing them. This grants an additional level of confidence associated with the coin and are unlikely to drop below the value of the underlying physical asset, due to the effects such as arbitrage.For example, fiat-pegged coins are coins that are tied to a specified amount of fiat currency, usually on a one-to-one ratio (i.e.1 StablecoinX = $1). The companies that issue these currencies must have fiat reserves in the equivalent amount of the stablecoins they have issued.Crypto-pegged stablecoins constitute coins that are tied to a specified amount of another cryptocurrency, such as Bitcoin or Ethereum. Algorithmic stablecoins use supply-and-demand to automatically maintain a stable value.
Read this Term network.
The official announcement has further detailed that Diem’s network is already in its pre-launch phase.
“Through conversations with our customers, we identified a need for a U.S. dollar-backed stablecoin that is regulated and highly scalable to further enable them to move money without barriers,” Alan Lane, Silvergate Bank’s CEO, said.
For the acquisition, Silvergate has issued 1,221,217 shares of class A common stock to Diem and paid an additional $50 million in cash, thus taking the total value of the consideration to almost $182 million.
A Controversial Project
Launched in mid-2019, Diem, then known as
Libra
Libra
Libra is a yet-to-be-released cryptocurrency proposed by Facebook, Inc., that will aim to serve as a global payment system and a stable financial infrastructure that people across the world can use. The projected release date of the libra cryptocurrency is currently slated for 2020, while the project is currently being managed by the Libra Association.Headquartered from Geneva, Switzerland, the Libra Association main purpose is founded on three pillars.This includes the provision of a framework of governance oversight for the Libra network and Libra reserve, overseeing active operations and longevity of the Libra payment system, and facilitating the flow of services of the Libra Blockchain.The Libra Association is overseen by the Libra Association Council.This is comprised of organizations from the technology, telecommunication, payment, blockchain, venture capital, and nonprofit sectors.The creators of the coin are Morgan Beller, who initially started working on cryptocurrency and blockchain technology at Facebook in 2017, David Marcus, and Kevin Weil. Before the announcement of the Libra cryptocurrency on June 18th, 2019, Facebook had been considering coining the digital currency GlobalCoin or Facebook Coin.Will Libra Ever Launch? Facebook has expressed multiple times that they will not launch the Libra cryptocurrency until all regulatory matters have been met.Facebook CEO Mark Zuckerberg has since assured lawmakers that Libra would not launch without first acquiring approval from United States regulators. Past participants of the Libra Association who left in October of 2019 include PayPal, eBay, Book Holdings, Mercado Pago, Visa, Stripe, and MasterCard. It should be noted that the source code for Libra is written in Rust that is open-source through the Apache License. What’s unique about Libra is that it will not depend upon cryptocurrency mining while only members of the Libra Association will be in a position to validate and process transactions. Facebook plans to launch a digital wallet known as Calibra in 2020, which will serve as an avenue for acquiring Libra along with Facebook Messenger and WhatsApp.
Libra is a yet-to-be-released cryptocurrency proposed by Facebook, Inc., that will aim to serve as a global payment system and a stable financial infrastructure that people across the world can use. The projected release date of the libra cryptocurrency is currently slated for 2020, while the project is currently being managed by the Libra Association.Headquartered from Geneva, Switzerland, the Libra Association main purpose is founded on three pillars.This includes the provision of a framework of governance oversight for the Libra network and Libra reserve, overseeing active operations and longevity of the Libra payment system, and facilitating the flow of services of the Libra Blockchain.The Libra Association is overseen by the Libra Association Council.This is comprised of organizations from the technology, telecommunication, payment, blockchain, venture capital, and nonprofit sectors.The creators of the coin are Morgan Beller, who initially started working on cryptocurrency and blockchain technology at Facebook in 2017, David Marcus, and Kevin Weil. Before the announcement of the Libra cryptocurrency on June 18th, 2019, Facebook had been considering coining the digital currency GlobalCoin or Facebook Coin.Will Libra Ever Launch? Facebook has expressed multiple times that they will not launch the Libra cryptocurrency until all regulatory matters have been met.Facebook CEO Mark Zuckerberg has since assured lawmakers that Libra would not launch without first acquiring approval from United States regulators. Past participants of the Libra Association who left in October of 2019 include PayPal, eBay, Book Holdings, Mercado Pago, Visa, Stripe, and MasterCard. It should be noted that the source code for Libra is written in Rust that is open-source through the Apache License. What’s unique about Libra is that it will not depend upon cryptocurrency mining while only members of the Libra Association will be in a position to validate and process transactions. Facebook plans to launch a digital wallet known as Calibra in 2020, which will serve as an avenue for acquiring Libra along with Facebook Messenger and WhatsApp.
Read this Term, was initially planned for launch within a year. But the project faced regulatory headwinds due to Facebook’s tainted reputation with data and also concerns over a financial impact of a private currency.
The stablecoin project saw an exodus of its initial partners within months, and Facebook CEO Mark Zuckerberg was also forced to testify in front of the US Congress. To move away from all the controversies, the project even rebranded and changed the architecture of its stablecoin.
Silvergate Bank, which is known for its crypto-friendly policies, was already working with Diem. Both the organizations earlier tied for the launch of a USD-pegged stablecoin, but that did not receive a regulatory green light.
“In the United States, a senior regulator informed us that Diem was the best-designed stablecoin project the US Government had seen,” Diem’s Levey added. “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.”
