December 1st, Facebook Libra announced its new name- Diem. According to many analysts, it is in a bid to distance itself from Facebook. Not just a name change, the project has hired executives to pilot its progress. Diem is envisioned to be a stablecoin backed by reserves in multiple fiats to ease remittance and financial inclusion for the unbanked. To launch 2021, there is still a very long way for the project to go.
Despite the name change, the project has continued to receive backlash from Governments and regulators around the world. German Finance Minister Olaf Scholz, said while reacting to Facebook Libra’s name change:
“A wolf in sheep’s clothing is still a wolf… It is clear to me that Germany and Europe cannot and will not accept its entry into the market while the regulatory risks are not adequately addressed.”
This was after a virtual meeting of Finance ministers and central bankers from the Group of Seven (G7) as reported by Reuters on December 7th. The report concluded that “Facebook announced plans in June to launch its digital currency but regulators around the world fear it could destabilise the global financial system.”
Facebook is a pretty big name in the media world. But, it still faces a lot of court charges from many countries for privacy leaks. The concern of many people has been that a company that has multiple charges on privacy and security leakages is launching a stablecoin on a network that promotes privacy. Just as emphasized while Diem was Libra, Facebook need to answer to its charges before focusing on a venture like this.
Blockchain technology is a cutting edge tech that doesn’t depend on its creators (except for stablecoins). But the ordeal for Facebook’s Diem traces its creator and not its code.
Ayobami Abiola, a cryptocurrency enthusiast, and writer at The Currency Analytics began unveiling deep thoughts about Diem’s case in a tweet thread:
“The question is; will #Facebook #Libra recently dubbed #diem (@DiemAssociation) still face the same lawsuits if its coin is a utility token on @Facebook? Just like #itunes gift card, #amazon cards, etc. Will it need this much scrutiny if it launching an #ad token for FB business?”
It seems that much of the problem Diem faces from the regulators is tied to the fact that it is a stablecoin or maybe not. What if another media company took up the same vision. Ayobami opined:
“2. The fact still remains that many people are wary of the underlying creator, #facebook. What if @Twitter were to take up the same venture, will it have the same problem? Maybe, but not as much. #Blockchain is built to be faceless but not in #Diem’s case.”
It is as though Diem’s case is different from other crypto projects DeFis especially where it is not necessary to know the founder or team members personally. More crypto projects will soon rise to challenge the fiat system. He concluded:
“3. The better part may be that it threatens the very fabric of Fiat’s system. It shakes the core beliefs of traditional regulators. The joy is that even if #diem doesn’t make it, another will rise in its place… #Google, or #twitter maybe?”