It’s official: Meta’s stablecoin project is no more.
♎ Announced in 2019 as Libra, a project of a stablecoin backed by a basket of currencies, then rebranded into Diem, a project of a stablecoin backed by dollars, it has met a vigorous opposition from the regulators around the world, and in the US in particular.
Stablecoins are not cryptocurrencies in a strict sense, they are mere tokens issued either in a centralized (Tether, USDC, would-be Diem) or in a decentralized way (DAI, Terra UST). These tokens, however, can circulate on the blockchain and traded against other cryptoassets.
The company behind a centralized stablecoin can issue any amount of those and is trusted to keep appropriate fiat reserves to be able to exchange a stablecoin for a fiat at any time. Tokens being smart contracts at their core, the issuing company can also deploy additional conditions, like checking sending/receiving addresses against a blacklist and freezing a transaction if this condition is fulfilled (like does USDC).
⚖️ Stablecoins have become one of the cornerstones of crypto regulation after the Libra announcement, and it is now clear that Meta won’t be allowed to create its own. This week the company announced having sold its Libra-Diem assets to a crypto-focused bank Silvergate for $200M.
With almost 3 Bn users for Facebook and 1.4 Bn users for Instagram, Meta’s stablecoin could have become the world’s most popular currency and turn the company into world’s biggest bank. That would have been too much, and we side with the regulators on this.
However, the end of the stablecoin dream does not mean that all crypto projects must stop. Meta still has its crypto wallet Novi, it ambitions integrating verified NFT avatars, most recently it has joined the Crypto Open Patent Alliance… who knows, maybe one day Facebook and Instagram will integrate crypto payments 😏