Facebook-backed digital currency project, the Diem Association, has partnered with cryptocurrency-friendly bank Silvergate to launch a stablecoin pegged to the United States dollar.
Diem announced Wednesday a new model of its upcoming stablecoin, relocating its main operations from Switzerland to the United States and withdrawing its application for a payment system license from the Swiss Financial Markets Authority.
The association, which comprises of 26 financial firms including Nasdaq-listed cryptocurrency exchange Coinbase, is now planning to move forward with its USD stablecoin plans through Silvergate bank, which is set to be the issuer of the Diem USD and will manage the Diem USD reserve.
Diem Networks U.S., Diems wholly-owned subsidiary, will run the Diem Payment Network, a permissioned blockchain-based payment system facilitating Diem stablecoin transactions.
While Silvergate is a California state-chartered bank and a member of the Federal Reserve, Diem Networks U.S. is seeking to register as a money services business with the U.S. Department of the Treasury's Financial Crimes Enforcement Network, the announcement notes.
“We believe in the future of U.S. dollar backed stablecoins and their potential to transform existing payment systems,” Silvergate CEO Alan Lane said. “We're inspired by Diem's technology and commitment to building a regulatory compliant payment system that offers a safe and secure way to move money,” he added.
“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,” Diem CEO Stuart Levey noted.
The Diem Association did not immediately respond to Cointelegraphs request for comment.
As previously reported by Cointelegraph, Facebook released a white paper for its Libra cryptocurrency in June 2019, originally planning to peg the digital currency to several fiat currencies including the U.S. dollar, euro, the Japanese yen, the British pound and the Singapore dollar. Due to global regulatory pushback, Facebook-backed Libra Association has been struggling to launch its stablecoin ever since, eventually rebranding to the Diem Association in an apparent renewed effort to launch the digital currency.
The news comes shortly after Facebook CEO Mark Zuckerberg apparently hinted at being a Bitcoin holder earlier this week, announcing that two of his pet goats were named “Bitcoin” and “Max.” Some crypto industry observers including CryptoQuant CEO Ki Young Ju subsequently suggested that the move could be a sign of soon-to-come announcements of Bitcoin purchases from companies like Facebook.