Facebook wanted to revolutionize finance with a global digital currency — then came the regulators.
But after facing strong opposition from regulators around the world, the organization overseeing the project lost major backers including Visa and Mastercard. The group eventually watered down its plans, opting for multiple “stablecoins” backed one-to-one by different government-backed currencies, as well as one multi-currency coin.
Now known as diem, the Facebook-backed digital coin is expected to launch later this year, albeit in a much more limited form. When it finally arrives, diem won’t come with the same fanfare and controversy of the original idea envisioned by the social media giant nearly two years ago.
The Diem Association, the Switzerland-based nonprofit which oversees diem’s development, is aiming to launch a pilot with a single stablecoin pegged to the U.S. dollar in 2021, according to a person familiar with the matter.
The person, who preferred to remain anonymous as the details haven’t yet been made public, said this pilot will be small in scale, focusing largely on transactions between individual consumers. There may also be an option for users to buy goods and purchases, the person added. However, there is no confirmed date for the launch and timing could therefore change.
“It’s really drifted off the radar in a way that’s quite striking,” Michael Casey, chief content officer of the cryptocurrency publication CoinDesk and a former financial journalist, told CNBC.
Diem was met with intense scrutiny when it was first introduced. Given Facebook’s wide reach — it had 2.8 billion monthly active users in the fourth quarter of 2020 — central bankers and politicians feared the currency could threaten monetary stability and potentially enable money laundering. Facebook’s involvement also meant that there were concerns over how it would protect users’ privacy.
“It was such a stunning challenge to the international order, in that the backlash was just really powerful,” Casey said.
One big concern, according to Casey, was that