The alliance overseeing the virtual currency project Diem, which was formerly introduced as Libra under the banner of Facebook Inc., has made a strategic decision to relocate its nucleus of operations back to the United States from Switzerland, foregoing its initial ambitions to debut in the Swiss market. This consortium, known as the Diem Association, had been in active pursuit of a formal payment system license under the vigilant eye of Switzerland’s regulatory entity, FINMA.
This pivot to American grounds comes as the Diem collective, comprised of 26 influential financial entities and benevolent organizations, has opted out of its endeavor to secure the Swiss license. This move signals a shift in the epicenter of Diem’s activity to the U.S. In a significant partnership, the association’s U.S. branch has joined forces with Silvergate Bank, a reputable banking institution chartered in California, to assist with the issuance of the Diem tokens.
An early glimpse of the Diem currency, previously coined as Libra.
Diem Networks U.S., a subsidiary within the Diem Association, is poised to administer a cutting-edge blockchain payment system, facilitating instantaneous transactions with Diem stablecoins. This development is to occur in tandem with the subsidiary’s registration as a money services business with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network, as reported by the group.
“There is a firm commitment to forging a payment system that champions safety for consumers and merchants, makes transactions swift and cost-effective,” the association has asserted.
In a move that solidifies its allegiance to the U.S. market, the Diem Association is transferring its operational helm from the Swiss city of Geneva to Washington, D.C., aligning its locus of activity with that of its American base.
After yielding its endeavor to secure the Swiss Payment System license, FINMA disclosed that Diem’s application was progressing through the advanced stages. However, the organization now chooses to initiate its operations from its original American soil.
The Short Yet Turbulent Saga of Diem Association’s Regulatory Challenges
The timeline of Facebook’s cryptocurrency project has been riddled with more complexities than one might concede. Unveiled in June 2019 as the Libra Association, the endeavor lost critical partners such as eBay, Visa, and Mastercard within six months after its highly anticipated introduction. Concurrently, the proposed Libra faced outright rejection in both France and Germany. Bruno Le Marie, the then French Finance Minister, categorically stated that this contentious digital currency would not find sanctuary in France, citing concerns over national security and the potential compromise of the government’s sovereignty.
Le Marie, a vociferous critic of the currency plan, posited that this digital formulation was a threat to dismantle the economic structure underpinning the euro.
From a global perspective, governments and central banking authorities have universally shown resistance, anticipating risks of money laundering and terrorist financing engendered by the adoption of the cryptocurrency.
By April 2020, the Libra entity and associated partners relinquished their initial scheme of a multi-currency makeup, choosing instead to focus on single-currency stablecoins supported by major currencies and sought the green light from the Swiss regulators. In December of the same year, the initiative underwent a rebranding overhaul, emerging as Diem, signaling a renewed push for regulatory acquiescence by emphasizing the project’s autonomy.
Nevertheless, despite such a strategic rebranding effort, the venture continues to face postponements and challenges, as is apparent from the most recent announcements.
