The association, which comprises 26 financial firms and
non-profits, said it was relocating its main operations from Switzerland to the
United States and withdrawing its payment system license application with the
Swiss financial regulator.
Diem Networks US, a unit of the Deim Association, will run a
blockchain-based payment system that allows real-time transfer of Diem
stablecoins and will register as a money services business with the US
Department of the Treasury's Financial Crimes Enforcement Network, the group
said.
Stablecoins are digital currencies pegged to a fiat
currency. California-based Silvergate Bank will issue the Diem USD stablecoin
and manage the Diem USD reserve. Diem said it would launch a pilot of the
stablecoin, but it did not say when.
"We are committed to a payment system that is safe for
consumers and businesses, makes payments faster and cheaper," the
association said.
In a statement, the Swiss Financial Market Supervisory
Authority confirmed Diem's decision to withdraw its application for a payment
license.
"Diem is planning to launch the payment system from the
USA in a first phase because initially the project will focus on the USA as its
target market," it said.
Facebook first unveiled plans for Libra in June 2019, part
of an effort to expand beyond social networking into e-commerce and global
payments. It said Libra, alongside partners like payment firms and credit card
companies, would create a digital token backed by a wide mixture of currencies
and short-term government debt. The social media giant said it hoped Libra
would power transactions between consumers and businesses around the globe, and
offer more people access to financial services. But the project immediately ran
into fierce opposition from policymakers globally, who worried it could erode
their control over the money system, enable crime, and harm users' privacy.
In April 2020, Libra and its partners abandoned plans to
hold a basket of currencies and sovereign debt in favour of stablecoins backed
by major currencies and sought the Swiss regulator's approval. In December, Libra
rebranded as Diem in a renewed effort to gain regulatory approval, with its
scope scaled back further to a single dollar-backed digital coin.
Currently, Facebook's digital wallet Novi is one of Diem's
26 members and a minority investor.
© Reuters