Facebook’s foray into financial services ended ignominiously last week as its new parent Meta sold off the Diem project to California’s Silverlake Bank for a reported sum of US$200 million.
According to Bloomberg, regulators put pressure on the Californian bank to issue a token, presumably so they could get a good look at it.
“If Diem is indeed selling its assets, that may be an indication that the cryptocurrency can’t find a way forward,” reports The Verge.
“Originally, Libra was meant to be a digital token backed by a basket of currencies from around the world, but regulators quickly halted that idea. So a simplified design was created, pegging a rebranded Diem token to the US dollar. Apparently that wasn’t good enough.”
Libra was first mooted by Facebook back in 2017, and it started building a team in 2018.
The irony here is that financial regulators and central banks were so alarmed by Facebook’s plans and its potential reach that they began working on their own central bank digital currencies, encouraged by the Bank for International Settlements.
The problem, as articulated barely a week ago by the UK House of Lords, is that there’s no obvious use for central bank digital currencies apart from fending off Facebook money, which is now no longer a threat.
At one stage, Facebook had hired former PayPal executive David Marcus to run the Libra project. PayPal remains a foundation fintech in Silicon Valley and its former executives have gone on to launch many other fintechs.
It’s also where Google is turning as it hires Arnold Goldberg, who ran PayPal’s merchant business. Just like Facebook, Google has discovered that finance isn’t just tech plus some managers. “Google has hired PayPal exec Arnold Goldberg to help reset its ambitions for banking and payments,” writes Finextra.
“Google's most recent foray into the banking sector, Plex, was killed off after bank's got cold feet about giving the firm a leg-up into the current accounts business.
“At the time, Google said it wanted to focus on ‘delivering digital enablement for banks and other financial services providers rather than us serving as the provider of these services’.”
Google's president of commerce Bill Ready says Arnold's recruitment is part of a broader strategy to take a more nuanced approach to financial services and the payment industry, including cryptocurrencies. Ready told Bloomberg that Google was “not a bank”.
Reprinted from Lafferty.com