Facebook-backed crypto group rebrands Libra as Diem Network in hopes of fresh start

Representational image of Facebook cryptocurrency
Representational image | Photo: Pixabay

Text Size:

San Francisco: Libra Association, a cryptocurrency project started by Facebook Inc. that drew regulatory blowback worldwide, is hoping a new name offers a fresh chance to win over regulators and gain a foothold in the emerging market.

The group, which is preparing to launch its first digital coin, will now be known as Diem Network, named for the word “day” in Latin. Its currency will be called the Diem Dollar.

“We like the connotation of it kind of being a new day for the project,” the group’s chief executive officer, Stuart Levey, said in an interview. “We wanted a new start.”

Almost immediately after Libra launched in June 2019, politicians and regulators raised concerns about the effort. They worried about privacy, money laundering and companies like Facebook taking power away from central banks. Supporters like PayPal Holdings Inc. and Visa Inc. fled the project, which initially hoped to attract 100 members before launch.

The new Diem Network, which has 27 participants today, has abandoned the 100-member goal and is taking things more slowly. The group plans to issue a stablecoin — a digital currency pegged to an outside asset — that’s tied to the U.S. dollar. Later, Diem Network may pursue additional fiat-based cryptocurrencies, Levey said.

Initially, Libra had proposed creating a cryptocurrency supported by a basket of government-issued fiat currencies and securities.

The association also no longer plans to eventually transition to a so-called permissionless blockchain, which would have let anyone participate in verifying transactions.

Other inner workings of the project may have changed as well. Levey declined to comment on whether investors in the association will end up receiving a special governance coin, as per an earlier plan.

With the project’s ambitions scaled down, its appeal may have dwindled. There’s plenty of competition from existing U.S. dollar-based stablecoins, such as Tether and USD Coin. One rival, called Celo Dollar, is also governed by an association, which attracted many of the same companies that initially flocked to Libra.

Facebook has more than 2 billion users, some of whom may be persuaded to give Diem a try. But the social-networking giant has previously worked to distance itself from Libra. In May, it renamed its Calibra blockchain group Novi to make it sound less like Libra.

The Novi team is building a digital wallet that will eventually hold Diem coins, Levey said.

The Diem effort is waiting to be issued a license by Swiss regulators to launch, Levey said. Diem Network is also in talks with U.S. federal and state regulators, but isn’t waiting for any specific licenses or approvals from them, he said.

To satisfy regulators, Diem’s system will honor Western sanctions and regulatory reporting requirements.

“All of these design features we think make for a project we think that regulators will welcome,” Levey said, adding that he hopes central banks may wish to use the infrastructure in the future to issue their own digital currencies. – Bloomberg

Also read: To use cryptocurrency or not is no more a question in India. RBI must now fix payment market


Subscribe to our channels on YouTube & Telegram

Why news media is in crisis & How you can fix it

India needs free, fair, non-hyphenated and questioning journalism even more as it faces multiple crises.

But the news media is in a crisis of its own. There have been brutal layoffs and pay-cuts. The best of journalism is shrinking, yielding to crude prime-time spectacle.

ThePrint has the finest young reporters, columnists and editors working for it. Sustaining journalism of this quality needs smart and thinking people like you to pay for it. Whether you live in India or overseas, you can do it here.

Support Our Journalism