LONDON —Facebook’s digital currency project Diem (formerly known as Libra) has withdrawn its application for a Swiss payment license and will instead shift its operations to the United States.
The Diem Association, which oversees development of the Diem digital currency, had been pursuing a payment system license with Switzerland's FINMA watchdog, according to CNBC. Diem has now dropped plans to secure Swiss regulatory approval, while its U.S. subsidiary has partnered with Silvergate, a California state-chartered bank, to issue the token, the report stated.
"While 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 and the constructive feedback from FINMA and more than two dozen other regulatory authorities from around the world convened by FINMA to consider the project," Stuart Levy, Diem's CEO, said in a statement.
In addition, the company said Diem plans to move its operational headquarters from Geneva to Washington, D.C., where its U.S. unit is based. Following the announcement, FINMA said Diem's application for a Swiss license had been at the "advanced stage" but that the group now planned to launch its payment system from the U.S., CNBC said.
Strong Backlash
As CUToday.info has reported, formerly known as Libra, Facebook's vision for a digital currency was met with a strong backlash from regulators when it was first announced in June 2019, with central bankers and politicians worried it could undermine sovereign currencies like the dollar, enable money laundering and infringe on users' privacy.
Since that time Libra/Diem has lost several key supporters, including Visa, Mastercard and PayPal.
As CNBC noted, Diem had initially proposed a universal currency tied to a basket of major currencies and government debt. After much regulatory opposition, the group then switched its focus to multiple "stablecoins" backed one-to-one by different currencies, as well as one multi-currency coin.
For now, Diem is only planning to issue a U.S. dollar-backed stablecoin, called Diem USD. Unlike Bitcoin, which uses a public ledger system and isn't controlled by any single authority, Diem's technology will be open to only a few participants, such as Facebook and other members of the Diem Association. CNBC said.