Facebook’s Diem before entering the US market

Diem has withdrawn an application for a FINMA license as it wants to focus its stablecoin emissions exclusively on US participants.

Diem, a digital currency project run by Facebook, formerly known as Libra, has announced plans to launch a US dollar-backed stablecoin.

The move follows Diem’s withdrawal of its application for authorisation as a payment system from Swiss FINMA.

FINMA stated in a statement that the concession application had been available since April 2020, before Diem Networks GmbH withdrew to concentrate on the “important” target market USA.

“…The Diem Group plans to launch the payment system in a first phase from the USA. In addition, the payment system will be limited to US subscribers for the time being“FINMA said in a press release.

To advance the project, Diem Networks is currently seeking regulatory approval from the Financial Crimes Enforcement Network (FinCEN), an agency of the U.S. Department of the Treasury. The Facebook subsidiary has also entered into a partnership with US bank Silvergate, which will issue the tokens and manage the fiat reserve.

Facebook first announced the Libra project in June 2019. The goal at the time was to create a fiat-backed digital currency for the global market. The plan was to provide businesses and everyday users with access to fast, cheap and secure blockchain-based financial services.

It was originally intended to create a universal digital currency supported by a basket of major global currencies. These plans have since been abandoned, and the project has chosen to develop Diem USD. Unlike what was originally intended, this coin will be supported exclusively by the US dollar.

According to Reuters, Diem USD is set to launch as part of a pilot phase. However, there is no specific timetable for when this will happen.

The Diem Association currently has 26 partners after Libra was dropped due to concerns about money laundering from several major backers – including Visa, MasterCard and PayPal.

Stablecoins continues to receive a lot of interest from market participants, especially from players who are wary of the volatile nature of cryptocurrency prices.

Yesterday, the fully regulated and 100% Japanese yen-bound stablecoin GYEN debuted on Binance.  According to GMO Trust, the token issuer, the digitization of the world’s most traded currencies is a signal that the trend has arrived in the mainstream.

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