Diem Association, has partnered with cryptocurrency-friendly bank Silvergate to launch a stablecoin pegged to the United States dollar. Diem association is Facebook-backed digital currency project.
Relocating its main operations from Switzerland to the United States and withdrawing its application for a payment system license from the Swiss Financial Markets Authority, Diem announced Wednesday a new model of its upcoming stablecoin.
Also, now planning to move forward with its USD stablecoin plans through Silvergate bank, which is set to be the issuer of the Diem USD and will manage the Diem USD reserve, the association, which comprises of 26 financial firms including Nasdaq-listed cryptocurrency exchange Coinbase.
The Diem Payment Network, a permissioned blockchain-based payment system facilitating Diem stablecoin transactions, will be run by Diem Networks U.S., Diem’s wholly-owned subsidiary.
Diem Networks U.S. is seeking to register as a money services business with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network, while Silvergate is a California state-chartered bank and a member of the Federal Reserve
“We believe in the future of U.S. dollar backed stablecoins and their potential to transform existing payment systems,” Silvergate CEO Alan Lane said. “We’re inspired by Diem’s technology and commitment to building a regulatory compliant payment system that offers a safe and secure way to move money,” he added.
“While our plans take the project fully within the U.S. regulatory perimeter and no longer require a license from FINMA, the project has benefited greatly from the intensive licensing process in Switzerland,” Diem CEO Stuart Levey noted.
The Diem Association did not immediately respond to Cointelegraph’s request for comment.