It has been a great year for Cryptos and the legacy big tech. The social media giant, Facebook, envisioning a bright future for digital assets jumped into the digital payments space earlier last year. FB planned to launch its own native digital token dubbed as ‘Libra’ sometime in 2020. A not-for-profit organization called Libra Association was supposed to govern the project. However, almost instantly, the project got entangled in a regulatory quagmire, and to this day it has been unable to appease their concerns.
Technically speaking, the Libra coin is just another centralized stable coin pegged to a basket of fiat currencies used for cross-border payments. While the decentralized crypto projects criticized it for being an equivalent of an extremely centralized corporate entity encroaching on the Defi space with its monopolistic tendencies, regulators were worried about the disruption it might bring to the current “tried & tested” monetary system.
As regulators raised a red flag for Libra, the project started to see high-profile exits within months. By October 2019, the Libra Association which constituted 28 members originally had shrunk to 22 as the project seemed destined for a failure. Apart from facing numerous antitrust suites, the social media giant spent the next 12 months or so convincing regulators to give them the go-ahead.
Facebook has now taken a different approach to address the grievances of the regulators as it plans for a 2021 launch. It has decided to rebrand the project as ‘Diem Association’ ( Latin term for day) — perhaps looking for a new day for the project. One of the biggest objections to Libra’s original pitch was that it could enable financial crime. Responding to this, the novel association went on a hiring spree of ex-political & tech veterans.
“We think that there are technological and governance advantages from having a blockchain. It permits innovation and collaboration in the open-source space that we think adds real potential to the overall project, it adds collaboration and innovation, and frankly one of the things I love about it is there’ll be use cases developed and innovations that we at the Diem, Libra Association would never have thought of ourselves.”
~ Stuart Levey, CEO of Diem
These include — Christy Clark (former Premier of British Columbia, Canada), Steve Bunnell (former US Attorney) to serve as the Chief Legal Officer. Both of them will report to Stuart Levey, who was a member of the George W. Bush Treasury Department. Joining them as the Chief Technology Officer, Dr. Dahlia Malkhi, a Microsoft and VMWare veteran. Perhaps the corridors of power will be a little more friendly for Diem with the hiring of these ex-politicians.
Apart from reshuffling the structure and hiring of new people which apparently aims at giving the new entity a feel of a more autonomous association, there are other subtle changes being implemented also.
- The new project is distancing itself from Facebook further by not mentioning the company in the press release. On top of this, a revised white paper also reduces Facebook’s role. While it was mentioned six times in the previous version of the paper, reiterating a leadership role in the project — the latest version mentions that FB would have no special rights within the Association.
- “Diem dollar” — the first stable coin would be compliant with international regulations at the protocol level and follow regulations like the “FATF’s travel rule.”
- Contrary to the original vision of a digital coin that would be backed by a basket of fiat currencies, the project has now decided to launch a group of stablecoins that were each backed by a single fiat currency or asset.
Originally planned to launch in the first half of 2020, they now expect to see the first stable coin released as soon as the Swiss Financial Market Supervisory Authority (FINMA) gives a go-ahead — sometime in the new year. Although the project has evolved in its scope and specificity, the one thing that remains the same is that it would still work on a blockchain.
The main purpose of this rebranding endeavor appears to be one that satisfies the regulators as the team continues to engage them every step of the way. International remittances and merchant payments are still the two primary use cases of the new stablecoin. And considering a strong 2.5 billion user base of Facebook, the company sees a huge future in this. For the mainstream cryptos, the appeal remains the decentralized governance model and various use cases, far beyond the scope of Diem.
Originally Published on Medium
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