Facebook is about to give up its cryptocurrency

Several American newspapers have written in recent days that Meta, the company that controls the social network Facebook, among other things, may soon abandon its project to create a cryptocurrency, which was introduced in 2019 as Libra and has recently changed hands. dim.

According to sources familiar with the facts, he was cited among others The Wall Street Journal And from BloombergMeta, after noticing the actual failure of its highly ambitious project to create a new digital currency with global validity, for use in transactions on Facebook and beyond.

Meta unveiled the cryptocurrency creation project in June 2019, when the company was just called Facebook. The project was aimed at creating a digital currency to simplify online payments and decouple them from traditional bank fee schemes. It was said at the time that the cryptocurrency should be called Libra, but about a year later the name was changed to Diem. The cryptocurrency was allegedly managed by an association (initially called the “Libra Association” and later became the “Dim Association”), and not directly by Facebook.

However, the birth and creation of Facebook’s cryptocurrency, which did not immediately receive the approval of US regulators, has faced many problems and slowdowns. Initially, Facebook entered into an agreement with the world’s largest credit card operators – VISA and Mastercard – and with PayPal and eBay, which had to invest in the fund to which the value of the cryptocurrency would be “linked.” However, in October 2019, all of these companies decided to leave the fund.

Among the reasons for abandoning the project is the fear of not being able to meet all the demands of American financial institutions, and the concern that the new currency could be exploited in money laundering and other illegal activities. Jerome Powell, Chairman of the Federal Reserve, the central bank of the United States, also expressed “serious concerns” about the financial stability of the cryptocurrency. The European Commission requested more information about the project, believing that it could harm free competition online, given the size of Facebook and the fact that the company controls some of the most used apps on the market, such as WhatsApp and Instagram.

The name change to Diem came immediately after the abandonment of these companies and after testifying before the US Congress, Facebook CEO Mark Zuckerberg called for a response to the stability and transparency of the cryptocurrency. However, even the “rebranding” did not satisfy US investors and authorities and the project was gradually reduced in size.

Initially, the cryptocurrency had to be linked to multiple international currencies to avoid the excessive volatility typical of cryptocurrencies not linked to national currencies (such as Bitcoin). But in May 2021, the Deem Association decided to peg its cryptocurrency only to the US dollar. He then struck a deal with Silvergate Bank, which was supposed to issue the coin, hoping to reassure US regulatory authorities, but they continued to be skeptical of Facebook’s cryptocurrency. The project’s latest hitch came last December, when David Marcus, the CEO who headed the Diem project, decided to leave the company.

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