Money and Markets

Facebook-backed digital currency Diem is planning to trial this year, report says

Business Insider US
  • The Facebook-backed digital currency Diem is aiming to trial in 2021, CNBC reported.
  • Each stablecoin will be pegged to the US dollar, the report said.
  • Originally named Libra, Facebook's digital currency advances were criticised by regulators and other institutions.
  • For more stories visit Business Insider.

The Facebook-backed digital currency Diem is planning to launch a trial later this year, CNBC reported on Tuesday. A source told CNBC that the Swiss Diem Association, which is responsible for the creation and rollout of the digital currency, will start small and focus on monetary transactions between consumers.

In the trial, each stablecoin will be pegged to the US dollar. Diem will have capabilities for users to exchange money amongst themselves and they may be able to use it to purchase goods and services.

Last year, it was announced that the stablecoin would likely launch in January this year. It had rebranded from 'Libra' to Diem for the occasion and was scaled down significantly after receiving criticism from regulators, governments and monetary authorities.

Facebook originally planned to enter the digital currency sphere with a single, global coin linked to its social media platforms and been tied to a basket of fiat currencies. Current plans include multiple coins, each tied to a specific national currency, as well as a coin tied to multiple nation-state currencies.

Critics were concerned that the creation of a universal global digital currency by the social media company might potentially destabilize the global monetary system and become a breeding ground for illicit activities such as money laundering.

Privacy concerns linked to Facebook's data security scandals have also surfaced.

Ran Goldi, CEO of First Digital Assets Group, told CNBC he believes the Diem Association has made some major changes and turned "from a naive blockchain to a very sophisticated blockchain that you can see is trying to answer some of the questions that regulators had".

Libra had been backed by large-scale financial firms, including Visa and Mastercard, until concerns grew louder and they dissociated themselves from the project. They have both announced that they will support cryptocurrencies through their platforms in recent months.

The Diem Association, which is run from Switzerland and functions as the rebranded Libra association, has made various leadership changes following the departure of backers like Visa and Mastercard.

Talks with Swiss regulators regarding a payment license are ongoing, Diem's chief economist Christian Catalini told CNBC last month, and will have to be completed successfully for the Diem trial to launch this year.

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