The Facebook Founded Diem Association plan to launch its U.S dollar-pegged stablecoin in 2021, CNBC reported on Tuesday. Diem will start with a small-scale pilot program and will be pegged to the U.S dollar. It will highly based on payments between individual consumers, with the option for a user to buy goods and services.
The proposal for launching a stablecoin was first proposed in June 2019 with the name libra. The token was initially intended to be a universal currency tied to a basket of Sovereign currencies such as the U.S.dollar and euro. The concept faced backlash from the international government and ultimately lost big backers like Mastercard and visa.
The Libra group changed its plan and moved towards “Stablecoins” backed one-to-one by various government-backed currencies.
Switzerland based nonprofit Diem Association aim this year to introduce a pilot with a single stable coin pegged to the U.S dollar. The Diem project is currently in talks with Swiss regulators to secure a payment license. However, there is no confirmed date for the launch and timing could therefore change.
Diem faced intense scrutiny when it first introduced. The central bankers and politicians feared the currency could threaten monetary stability. Facebook’s involvement also meant that there were concerns over how it would protect user privacy.
As cryptocurrencies gain greater adoption and central banks work towards issuing their own digital currencies. Facebook’s Diem will benefit from the network effect of the social network’s 2.8 billion monthly users.
Indeed, Diem — or libra — may have been the big crypto story of 2019. But bitcoin and cryptocurrencies have gathered significant momentum over the past year, with bitcoin recently surging to a new all-time high above $60,000 and major firms like Tesla and Square making big bets on the digital coin. Meanwhile, crypto exchange Coinbase went public in a landmark direct listing on the Nasdaq.
