Facebook Plans To Launch Stablecoin That Will Compete With Dollar Early Next Year
Facebook Plans To Launch Stablecoin That Will Compete With Dollar Early Next Year
BY TYLER DURDEN TUESDAY, APR 20, 2021 - 09:05 PM
A couple of days ago, Morgan Stanley
warned that China's new digital renminbi -
the first "central bank digital currency" (or CBDC) - could
cement its status as the next reserve currency. But as
government and Wall Street continue their embrace of virtual currencies that,
some say, threaten to blow up the industry status quo and eliminate the need
for banks, corporations
are also striving to create the stablecoin of the future, challenging
governments' long-held monopoly on money.
Years after Facebook's Mark Zuckerberg first declared his
intention to launch a transnational stablecoin via Facebook's "Libra"
project that would, he hoped, enable cross-border payments on Facebook's
platform, the Facebook-backed digital-currency project Diem is
reportedly planning to launch its first stablecoin in 2021 as a small-scale
pilot, according to an anonymously sourced report from CNBC.
But Libra, which involved a convoluted plan to launch a
stablecoin backed by a potpourri of fiat currencies, was quickly scaled back
after Facebook's talk about creating a new international financial system to
supplant the dollar apparently rattled too many feathers. What
was left was later spun off as Diem, a re-branding that has given life to a
scaled-back vision of corporate stablecoin dominance. However,
When it finally arrives, Diem won’t come with the same fanfare and controversy
of the original idea envisioned by the social media giant nearly two years ago.
The person, who preferred to remain anonymous as the details
haven’t yet been made public, said this pilot will be small in scale, focusing
largely on transactions between individual consumers. There may also be an
option for users to buy goods and purchases, the person added. However, there
is no confirmed date for the launch and timing could therefore change.
"It’s
really drifted off the radar in a way that’s quite striking," Michael
Casey, chief content officer of the cryptocurrency publication CoinDesk and a
former financial journalist, told CNBC.
Facebook won't play an official role in the launch, which
instead will be overseen by the Diem Association, the Switzerland-based
nonprofit which oversees diem’s development.
In comments to CNBC, financial journalist Michael Casey said he
was surprised at how under-the-radar the diem project has become. It's almost
as if the international community has forgotten about it, he said. "It
really drifted off the radar in a way that’s quite striking," said
Casey, the chief content officer of the cryptocurrency publication CoinDesk who
was one of the first reporters at a major American newspaper (the Wall Street
Journal) to cover the rise of crypto.
The soft reaction to Diem is also surprising considering how
much of a backlash its predecessor created. "It was such a stunning
challenge to the international order, in that the backlash was just really
powerful," Casey said.
Diem has lost several senior executives over the past year, as
well as the backing of powerful corporations like Mastercard and Visa, among many
others. But in the wake of its rebranding, Diem is reportedly in
talks with Swiss financial regulators to secure a payment license, a crucial
step that would place the organization further along the path toward getting
its digital currency project off the ground.
Of course, more "government sponsored" competitors are
in the works: in addition to the eRMB, the ECB recently concluded a public
consultation on a digital euro and will make a decision this summer, and the
Boston Fed is set to release its initial research in the fall.
With stablecoins seen as a more practical alternative to bitcoin
and ether, we will be closely watching the rollout of stablecoins as a
space where corporations might win an early victory in the battle to use crypto
technology to seize the money-making monopoly from government - and from the
people.
To sum
up, why should readers be skeptical of Facebook's Diem? Well, Tom Luongo once
described it as a "Trojan Rabbit" that could quietly help Zuck seize
the ability to print money, and launch "the
Central Bank of Facebook."
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