The Libra Association, Facebook Inc’s digital coin project, will now be called the “Diem Association” as part of the social media giant’s attempt to rebrand and restructure. While Facebook had released a white-paper for Libra in June last year, the project did not take off as central banks and regulators had raised several concerns over the attempts to create the world’s first digital coin which would be backed by a basket of currencies.
Stuart Levey, chief executive officer, Diem Association told
Reuters that the purpose of the name change is to signify to regulators that the association is operating autonomously and independently from Facebook, though they will remain a critically important member. Facebook had created a payments entity, called Calibra, which would act as a digital wallet for the Libra coins. In May this year, the company changed
the name to Novi Finance.
Although the Financial Times reported
that Diem would launch its coin by January 2021, Levey told Reuters that it would only launch the coin after receiving approval from the Swiss markets watchdog. Diem will now launch a single dollar-backed digital coin and may pursue additional fiat-based cryptocurrencies, Levey told Bloomberg
, indicating that the idea to create a digital coin backed by a basket of currencies has now been set aside for the time being.
The single dollar-backed digital coin is essentially a “stablecoin”. While many cryptocurrencies are priced based on their perceived value, stablecoins have an intrinsic value based on the underlying fiat-currency. So while 1 Bitcoin may be worth over $18,000 today, its price will change compared to a stablecoin’s price which will be more or less in line with the underlying currency. There are several US dollar denominated stablecoins in the crypto universe including Tether, USD Coin and Celo Dollar.
While Facebook had said that it aims to get 100 member companies to the Libra project by the launch date, as of date Diem only has 27 members, including Novi Finance, Lyft, PayU, Coinbase, Spotify and Uber. Earlier supporters of the project like PayPal and Visa left the association.