A Senior Us Regulator Has Praised Diem’s Stablecoin, The Company Claims

• The Diem Association confirmed previous allegations that it was shutting down and selling all of its assets to crypto bank Silvergate for $200 million in a release on Monday evening

• They engaged extensively with just an interagency regulatory team on the architecture of the project,’ Diem stated in a public reaction to a note of concern from Congress in October

• According to a recent Decrypt investigation, the US government’s strategy for stablecoins is to stifle the business by putting the biggest stablecoin producers under the supervision of huge banks

Diem, originally known as Libra, is no longer a viable stablecoin project. The Diem Association confirmed previous allegations that it was shutting down and selling all of its assets to crypto bank Silvergate for $200 million in a release on Monday evening.

The notification is just a death notice, but there is a peculiar paragraph in Diem’s death notice that has piqued the interest of many on Crypto Twitter: They aggressively solicited opinions from governments and authorities around the world as They embarked on this project, and as a result, the project has evolved and improved significantly. A prominent regulator in the United States told us all that Diem had been the best-designed stablecoin project the US government has seen.

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It’s a bold allegation, given that regulatory opposition is usually regarded as the primary cause of Diem’s demise. It’s not the first time Diem has stated anything like this.

The Biggest Stablecoin Producers Under The Supervision Of Huge Banks

Besides financial crime compliance, they engaged extensively with just an interagency regulatory team on the architecture of the project,’ Diem stated in a public reaction to a note of concern from Congress in October. They made improvements as part of that study to incorporate input They received, and a top regulator told us that Diem seems to be the best-designed stablecoin project the US government has seen. (A Diem Association spokeswoman refused to comment for this article, other than directing Decrypt to the October news release.)

According to a recent Decrypt investigation, the US government’s strategy for stablecoins is to stifle the business by putting the biggest stablecoin producers under the supervision of huge banks. According to Coin Center executive director Jerry Brito, the launch of Libra by Facebook in 2019 had been a watershed moment that alerted the US government to the rise of stablecoins. (You may either applaud or blame Facebook for this action, depending on whether you think additional regulation would help or hurt the crypto market.)

Is it reasonable to believe that such a regulator praised Diem? Why, therefore, do you think it’s necessary to remind everyone about this acclaim in the midst of announcing the project’s demise?

There are a couple of subplots going on here.

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Diem’s Bones, Intends To Build Its Own Stablecoin

First and foremost, Silvergate, which purchased Diem’s bones, intends to build its own stablecoin. It’s unlikely it’ll go by the Diem name, but if it’s going to exploit Diem’s technology, the fact that a regulator praised Diem’s design could be a line aimed to entice Silvergate stockholders.

That statement, in my opinion, was written to be a beautiful hand-off for Silvergate According to Steven Kelly, a Yale Program on Economic Stability expert. They didn’t want to announce, They’re bailing on this due to all of the regulatory problems, and left Silvergate to account to its own board of directors and investors. If they simply state, They are unable to meet regulatory standards, that bank will be questioned.

Nonetheless, Kelly claims that the line’s wording, which he refers to as Trumpian, is simply not how regulators talk. They really don’t say things like that, even if they’re the most pro-Diem regulators. As a result, I’m not certain it’s a hoax. But, on the other hand, this could be anyone, right? It may be as simple as one government official saying, ‘Hey, this one is the nicest one I’ve seen.’

All of this is important for the numerous participants who remain inside the stablecoin race, although Meta is no longer one of them.

Silvergate; Paxos, that is underneath USDP and partnered with Meta on its Novi crypto wallet (that still exists, though that was initially known Calibra and was made to hold Libra, that does not exist); Tether, the world’s biggest stablecoin and also that has the most baggage and uncertainty surrounding it; Circle, that also partnered with Coinbase on USDC; and, perhaps most intriguingly, PayPal, which is trying to explore its own stablecoin and will no doubt seek to entice users to use it.