With the crypto market seeing a big 12% correction on May 13, following Elon Musk’s Tweet that Tesla is stopping the acceptance of Bitcoin for vehicle purchase, the Facebook-backed Diem Association announced thаt it would soon launch a U.S stablecoin pilot program.
Stablecoins, in this case – Facebook’s Diem, are a great way to grant all of the features of cryptocurrencies, but backing them with fiat currencies. In Diem’s scenario, consumers within a select network of companies will be able to use a digital token, tied to the price of the U.S. dollar.
However, the U.S. stablecoin is far back from Facebook’s initial plans of launching a global cryptocurrency, with fintech companies like Visa and PayPal as partners. The plan didn’t go through, as regulatory scrutiny forced some of the biggest payment providers to quit the association.
Meanwhile, the association also declared it is shifting its operations headquarters from Switzerland to the United States. The move is in conjunction with Diem’s plans of U.S. dollar-backed stablecoin since it’s simplifying the regulations for the digital currency. Furthermore, California-based Silvergate Bank would be the exclusive issuer of the stablecoins.
"The formation of this partnership is an important step in preparation for a Diem USD pilot," the association noted.
The ex-Libra project, launched in 2019, rebadged itself in December 2019, to showcase it is now far from Libra’s initial ambitions of a global cryptocurrency. Furthermore, a number of high-profile individuals left the project, including fintech visionary David Marcus, alongside a portion of the executive staff – the heads of strategy, product, marketing, and finance. In April 2020, Diem Association's Executive Vice President, Dante Disparte, departed from Diem to join Circle.
In contrast, companies like Uber, Shopify, Spotify, and Coinbase, who were once in the original Libra Association, are still in Diem, despite the series of uncertainty and regulatory havoc.
Meanwhile, the news about Facebook’s Diem Association planning to launch a stablecoin project comes just as the crypto sector is experiencing one of its worst daily performances in history. Most of the crypto projects lost anywhere between three and fifteen percent, with Bitcoin being down ten percent to trade around $50,000. Ethereum fell to a current price point of $3,7755.90, which indicates a 12% daily loss. One of the hottest crypto assets nowadays, Dogecoin (DOGE) tumbled almost 20% down, trading at $0.40952 as of press time.
A few crypto projects are on the green, however, with Cardano (ADA) adding almost 5% to its price over the past 24 hours, trading at $1.83 per token. Polkadot (DOT) showed minor price gains, while Nano recorded the most gains – 48%, compared to its price 24 hours back.