The Facebook backed Libra Association – the controversial crypto currency project, that unnerved regulators around the world – is changing its name to Diem Association.
The Diem Association, named after the Latin word for “day”, along with its subsidiary – Diem Networks, which will serve as a payment system operator, will introduce a new crypto currency – the Diem Dollar.
“We like the connotation of it kind of being a new day for the project. We wanted a new start”, Diem Association CEO, Stuart Levey said in an interview, quoted by Bloomberg.
The Libra project, which was launched back in 2019, immediately attracted the attention of regulatory authorities, central banks and governments, which raised their concerns about the impact Libra could have on the global financial system, pointing out unresolved issues with money laundering and privacy among others.
Early participants in the project like PayPal, VISA, MasterCard and eBay left after the negative reaction from major institutions like the European Central Bank (ECB), the Bank of England and many governments, who said that the new Facebook currency could undermine the authority of central banks, because of its sheer potential – Facebook has more than 2 billion registered members and potential Diem users.
At first Diem Association, which is currently backed by 27 companies like Coinbase, Xapo, Shopify and Spotify, plans to release a stable coin pegged to the U.S. dollar, which latter will be joined by more crypto coins, backed by other fiat currencies and asseets, Diem Association CEO Stuart Levey said.
This plan differs from the initially proposed one, where the Libra coin was supposed to be backed by a basket of government issued fiat currencies and securities.
Also, Diem Association no longer intends to transition to a permissionless blockchain, a system of verification of the transactions, currently used by crypto coins like Bitcoin.
As for the regulatory hurdles surrounding the project Diem is still waiting for an approval by the Swiss Financial Market Supervisory Authority (FINMA), as well as by U.S. federal and state financial regulators.
“The Diem project will provide a simple platform for fin tech innovation to thrive and enable consumers and businesses to conduct instantaneous, low-cost, highly secure transactions. We are committed to doing so in a way that promotes financial inclusion, expanding access to those who need it most, and simultaneously protecting the integrity of the financial system by deterring and detecting illicit conduct. We are excited to introduce Diem, a new name that signals the project’s growing maturity and independence,” Diem’s Stuart Levey also said.