Facebook-backed Diem stable coin, a rebrand of Libra, is ready for a small-scale pilot test this year, the company has revealed.
This is another attempt by the social media giant after it came under fire from regulators in 2019 for proposing the launch of what it viewed as a financial revolution in the form of a stable coin called Libra.
In June of 2019, Facebook proposed the development of Libra. This was a stable coin to be backed by a basket of currencies such as the U.S dollar and euro. At first, it got massive backing from the likes of Visa and Mastercard. However, with mounting regulation pressure primarily in the US and Europe, the project lost major backers. Ultimately, Mark Zuckerberg had to retreat and review his approach.
It was not long before it rebranded to Diem. The Diem stable coin, a modified version of Libra, has amended previous concerns with Libra. The Diem coin is still awaiting regulatory approval from Swiss regulators.
Now, according to a report by CNBC, Facebook will launch a pilot later this year. According to sources familiar with the matter, the Diem Association will launch a USD-backed stablecoin that will focus on transactions between individual consumers. There may also be an option to buy goods and pay for services, the sources revealed. However, the Association has not yet revealed when it will launch the pilot.
Diem coin faces crucial step
Despite the reinvention, backers that left in 2020 are yet to commit again to the project. Nevertheless, market observers believe that this time Facebook is likely to complete its launch. Months of development and a changing opinion on digital currencies will go a long way.
The only real concern for Facebook is that regulators are still wary of its torpid approach to consumer protection. With a massive network spread across the world through Facebook, WhatsApp and Instagram, distribution and access of the stable coin will be effortless.
With no specific date set for the launch and most developments flying under the radar, Facebook seems to be approaching the latest trial with a great deal of caution. In addition, hundreds of companies are now involved with the cryptocurrency industry. Facebook will capitalize on the current hype to get the coin over the line.
Bahamas leads in CBDC development
For some countries, their objection to currencies such as Diem or even Bitcoin has stemmed from their ambition to launch a central bank digital currency (CBDC). China has looked most likely to achieve this on a large scale. However, according to PwC, the Bahamas and Cambodia are leading in the development of CBDCs. The Bahamas scored 92 out of 100 while Cambodia scored 83, with Chin trailing at 75. The Bahamas has recently launched the Sand Dollar, a digital alternative to the national currency.
The UK is only just getting involved with the latest innovation. Its Central Bank a few days ago confirmed the establishment of a task force that will explore the case for a digital currency. The Bank of England has made clear that Britcoin would co-exist with other forms of currencies.
The Government and the Bank of England have not yet made a decision on whether to introduce a CBDC in the UK and will engage widely with stakeholders on the benefits, risks and practicalities of doing so,
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