The Diem Association announced a strategic partnership with the crypto-friendly US bank – Silvergate Bank. Consequently, both parties plan to launch a stablecoin pegged to the American dollar. Additionally, the Association will relocate from Switzerland to the United States.
A New Home for Diem
The blockchain-based payment system Diem, launched by the social media behemoth Facebook, announced a new model of its impending stablecoin. The project – formerly known as Libra – partnered up with the crypto-friendly bank Silvergate to ensure the stability of its upcoming implementations.
The American bank will become the exclusive issuer of the Diem USD stablecoin and will stay in charge of the Diem USD reserve. In its turn, Diem Network US will manage the Diem Payment Network (DON) – a blockchain-based payment system that assists the development of stablecoins among the approved participants.
Stuart Levey – CEO of Diem – shared his thoughts about the mutual partnership with the US bank:
”Silvergate is a leader in financial innovation and an ideal partner for Diem as we move forward with a blockchain-based payment system that protects consumers and enhances the integrity of the financial system. We look forward to working with Silvergate to realize this shared vision.”
Alan Lane – CEO of Silvergate – noted that the American bank is highly motivated to work alongside Diem on the future project:
”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. We’re excited to be at a place in the process where we can announce this product with confidence and look forward to continuing our work with Diem to bring this to market.”
Separately, Diem also revealed that it would shift its primary operations from Switzerland to the US. The decision might not occur as a surprise since Silvergate is located in California and is a member of the Federal Reserve. Despite the reallocation, the Association indicated that it has ”benefited greatly” during its stay in Switzerland.
The Facebook Connection
As CryptoPotato recently reported, the Facebook-backed project Diem could be launched by the end of 2021. Following a long process of changes and rebranding, the upgraded version of the initiative will focus on transactions for individual customers, including potentially purchasing goods.
Announced as Libra in 2019, the Facebook-backed payment system faced extreme scrutiny from watchdogs for its initial idea to serve as a ”single global digital currency.” This plan caused controversy among backers as numerous partners such as MasterCard, Visa, Spotify, Uber, and PayPal withdrew from the project.