Facebook-backed digital currency project, Diem, could launch its stablecoin as a small-scale pilot later this year, according to an anonymous source. Diem this time will be pegged only to the U.S. dollar as opposed to the previous plans of launching as a universal stablecoin pegged to a basket of fiat currencies from leading countries.
In a CNBC report published on April 20, an anonymous source has claimed that the Switzerland-based nonprofit, the Diem Association is planning to launch its Facebook-backed stablecoin pegged to the U.S. dollar by 2021.
Diem is currently trying to obtain a payment license from the regulators in Switzerland. The stablecoin is expected to be released for pilot trials later this year. Subsequently, the stablecoin would have to pass anti-money-laundering checks too.
As per the report, this would be a small-scale pilot and will focus on payments only between individual users. Goods can also be purchased in the pilot trial. However, no official date has been announced as of yet.
Diem was met with intense scrutiny when it was first introduced. Lawmakers and regulators across the globe have emphasized that the Facebook-backed stablecoin could disrupt the global financial system and payments system.
Given Facebook’s wide reach over its 2.8 billion monthly active users in the fourth quarter of 2020, regulators were concerned over the stablecoin's potential of disrupting its monetary stability and enabling money laundering. Facebook’s involvement also meant that there were concerns over users’ privacy policies.
Since facing strong rejection from global regulators, most of its big-name partners started cutting off from Diem Association.
Since then, Facebook made some alterations to its crypto project. First proposed in June 2019 with the name Libra, the stablecoin was initially intended to be a universal currency tied to a basket of fiat currencies from leading countries. Now it has rebranded itself to Diem and is tied only to the U.S. dollar.