Facebook and its crypto partners are expected to conduct a small-scale pilot using the Diem stablecoin sometime in 2021, CNBC reported on 20 April.
Citing a “person familiar with the matter”, the publication said the Diem project, formerly known as Libra, had intentions to launch a pilot with a single stablecoin pegged to the U.S. dollar. The source further said the pilot was expected to be a small-scale one, with tests largely focusing on payments between individual consumers, though it could also include the option for users to buy goods and services. While there was no confirmed date for the launch of the pilot, it is expected to happen sometime in 2021. Diem’s chief economist, Christian Catalini, told CNBC last month that:
“A big step of our dialogue with regulators has been a phased approach to launch. We are going to be phasing in different functionalities and use cases, applications in different areas.”
Rumors that Diem was going to first launch a single stablecoin tied to the dollar emerged back in November 2020, when the Financial Times cited “three people involved in the initiative”, who said the project was aiming for an early Q1 2021 launch. While the Diem Association is yet to make a formal statement, it is currently in talks with the Swiss Financial Market Supervisory Authority (FINMA) to acquire a payment license.
In February the Diem Association partnered with Fireblocks and First Digital Assets, who agreed to provide a secure wallet and infrastructure for financial institutions to connect to the Diem network.
Originally unveiled in June 2019, the Libra project had the goal of launching a single stablecoin tied to a basket of different fiat currencies, and usable through Facebook’s Messenger and WhatsApp. The project quickly attracted the attention of global regulators, which resulted in the association loosing valuable members — such as Visa, Mastercard, PayPal, eBay, and others — who wanted to avoid any negative relations with the watchdogs.
The project received such a strong regulatory backlash, it was forced to scale-down its ambitions of a single stablecoin and focus on developing a number of stablecoins pegged to different national currencies. The project went as far as to re-brand itself to Diem in hopes to ease its regulatory approval process.