The Facebook-backed digital currency project, Diem, said it had withdrawn its application for a Swiss payment license to move its operations to the United States.
The Deem Association, which oversees the development of Facebook’s digital currency, was seeking to obtain a payment system license with the Swiss regulator, FINMA.
Deem has now dropped its plans to secure Swiss regulatory approval, while its US subsidiary has partnered with Silvergate, a California chartered bank, to issue the token, according to the IT website.
“While our plans take the project entirely within the regulatory periphery of the United States and no longer require a license from FINMA, the project has benefited greatly from the extensive licensing process in Switzerland, constructive comments from FINMA and more,” Stuart Levy, CEO of DEEM, said in a statement. Twenty other regulatory bodies from around the world.
And it indicated that it plans to move its operational headquarters from Geneva to Washington, DC, where its American unit is located.
After the announcement, FINMA said: “Deem’s application for a Swiss license was in an advanced stage, but the group is now planning to launch its payment system from the United States.”
Facebook libra became “dim”
Facebook’s vision of the digital currency, formerly known as Libra, met with a backlash from regulators when it was first announced in June 2019.
Central bankers and politicians were concerned that Facebook’s digital currency could undermine sovereign currencies like the dollar, enable money laundering and violate users’ privacy.
The Facebook-backed organization has since lost several major supporters, including Visa, MasterCard and PayPal.
“Deem” initially proposed a global currency linked to a basket of major currencies, and after much regulatory opposition, the group shifted its focus to several stable currencies backed by different currencies, in addition to one multi-currency currency.
Deem is currently planning to issue a stable currency backed only by the US dollar, called Diem USD.
And unlike Bitcoin, which uses blockchain technology and is not controlled by any single authority, Deem will only be available to a small number of participants, such as Facebook and other members of the Diem association.
And the stablecoins are also designed to avoid the noticeable price volatility in cryptocurrencies such as Bitcoin.
Silvergate is the exclusive source for Diem USD and manages the Diem USD reserve in dollars, as it has become an ideal destination for cryptocurrency companies that traditional lenders shun.
Deem is preparing to launch a pilot program using its stable currency, pegged to the dollar, later this year. The pilot program will be small and focus largely on transactions between individual consumers.