The crypto market is consolidating after the information appeared that Facebook is about to abandon the Diem project.
The largest social network’s own cryptocurrency has been the main hope of the crypto industry for several years, even though the concept of Facebook Coin has changed several times. Two years ago, the statement about the launch of Facebook’s own cryptocurrency became an information bomb. In the summer of 2019, Zuckerberg announced the launch of the Libra cryptocurrency and the Calibra wallet.
Cryptocurrency capitalization was provided by an alliance of several dozen world leaders in the IT industry, Fintech, and finance, including Visa, MasterCard, PayPal, eBay, Booking, Vodafone, etc. The user base was provided by Facebook, Instagram, and WhatsApp and could be over 2.5 billion people.
Such a scale frightened the American authorities. Zuckerberg was summoned to a Congressional hearing, from which he emerged flushed and confused. The Facebook CEO was advised to suspend development and launch scheduled for early 2020. This was done. And soon the partner companies began to leave the Libra Association. Authorities feared that the Libra stablecoin, pegged to a basket of currencies of the US dollar, euro, yen, and pound sterling, could threaten the stability of the global financial system. After that, Facebook changed the concept of its cryptocurrency. It has now been proposed to issue multiple stablecoins pegged to multiple fiat currencies, including the US dollar, euro, British pound, and Singapore dollar.
In May 2020, Facebook rebranded the cryptocurrency to eliminate the accumulated negative regarding Libra. The time of the rebranding was not chosen by chance. It was in May 2020 that Pavel Durov’s TON project with the Gram cryptocurrency crashed. TON (Gram) was a direct competitor to Libra with a big chance of success. Darknet TON demonstrated hundreds of thousands of transactions per second on a test launch and could have a user base of the popular messenger Telegram about 400 million users. TON (Gram) could also compete with VISA and MasterCard. Experts believe that this is why the SEC recognized Gram token as a security and prohibited Gram issuing.
After Durov stopped TON in May 2020, Zuckerberg decided to use the moment and re-announce Facebook’s cryptocurrency under the name Diem. The wallet was renamed Novi, developed by Novi Financial, and the Libra Association was renamed to Diem Association. However, this did not help. Apparently, the banking lobby continued to put pressure on Zuckerberg to completely abandon the launch of his own cryptocurrency. Novi Financial has begun negotiations with USD Coin (USDC) and Paxos Standard (PAX) stablecoin issuers, Circle and Paxos, respectively, according to The Block, a New York-based digital asset research and analysis company.
Circle recently announced plans to become the first U.S. digital bank and filed with the SEC to merge with the publicly traded Concord Acquisition Corp. Circle intends to increase the capitalization of USDC to hundreds of billions of dollars. Facebook and Diem Association can help build capitalization. And Circle, apparently, has no problem with the regulator.