It’s been a brutal three years for the Diem Association – the consortium funded by Meta/Facebook and others – that sought to originally launch a cryptocurrency called Libra in 2019. This idea was put forward by the Association and it became a dollar-backed stablecoin named Diem. After Facebook CEO Mark Zuckerberg (NASDAQ:), was summoned before Congress, this pivot was needed to defend the original Libra project. However, Zuckerberg’s testimony didn’t help his situation and regulatory pressure mounted.

Since then the project has had its ups and downs – more downs than ups if we’re being honest – including the departure last year of its high-profile co-founder David Marcus. Bloomberg published Wednesday’s report that Meta/Facebook was looking to end its interest in the Diem Association. It doesn’t take a genius to realize that without the backing of Meta, Diem is all but dead.

In actuality, it’s been dead for months despite marketing and publicity pablum to the contrary, existing only as a zombie project that would never get past regulatory ridicule. Last fall, when then-Facebook selected Coinbase (NASDAQ:) as its custodial partner for Zuckerberg’s Novi digital wallet, that partnership was roundly rebuffed by politicos. Six senators wrote a letter jointly to Zuckerberg urging Facebook to end Novi and make a pledge to do so. NotTo bring Diem stablecoin on the market.

“Facebook is once again pursuing digital currency plans on an aggressive timeline and has already launched a pilot for a payments infrastructure network, even though these plans are incompatible with the actual financial regulatory landscape—not only for Diem specifically, but also for stablecoins in general,” the senators wrote in their letter to Zuckerberg. “Unfortunately, Facebook’s decision to pursue a digital currency and payments network is just one more example of the company ‘moving fast and breaking things’ (and in too many cases, misleading Congress in order to do so). Facebook cannot be trusted to manage a payment system or digital currency when its existing ability to manage risks and keep consumers safe has proven wholly insufficient.”
Despite these apparent fatalities from policy makers, Bloomberg reported that Diem reached an arrangement with Silvergate Capital Corp. (NYSE:) Corp. to issue Diem. But, they were met by resistance from U.S. Federal Reserve.

The article went on to state that after a lengthy back-and-forth between the Diem advocates and regulators, Fed officials finally told Silvergate that the agency was uneasy with the plan and couldn’t assure the bank that it would allow the stablecoin to be issued. So without approval, the Diem project had no coin – leading up to Meta’s reported decision to sell its stake in Diem. Bloomberg was told by people familiar with the matter that Diem’s assets have uncertain values and there is no way to be certain they will find buyers. We’ll have to wait and see how this ongoing saga unfolds.

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