Facebook to start pilot runs for its digital currency ‘Diem’ this year, says report

Facebook to start pilot runs for its digital currency ‘Diem’ this year, says report
Facebook could soon start testing its digital currency after long wait.iStock
  • Facebook’s digital currencyDiem’ reportedly ready for testing starting 2021.
  • The currency is said to be rolled out on a small scale during the pilot phase.
  • The social media giant initiated its plan to launch a digital currency in 2019 but had to drop it due to global backlash.
Facebook might flag off a trial of its currently halted digital currency project by the end of this year, as per CNBC. The currency, formerly known as Libra, was renamed Diem in December 2020, after receiving backlash from regulators and the general public.

CNBC reported, quoting a source it did not name, that Diem Association, the Switzerland-based body that oversees Diem's development is planning to launch a pilot with a single stablecoin pegged to the USD in 2021.

Diem is an independent group organised by Facebook, with other association members including Andreessen Horowitz, Coinbase, Spotify, Lyft and Uber.

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The person, quoted by CNBC, also says this pilot will be rolled out on a small scale focusing on transactions between individual consumers. There could be an option to let users buy goods. However, the details about the launch date are still scarce.

From Libra to Diem: What exactly happened?

The social media giant first announced the plans about its digital currency in June 2019 but was served with immediate outrage from people around the world and from the government concerned about the company's monopoly in the world's largest currencies. Facebook's initial plan with Libra was to build a global financial system that could be used by anyone from any corner of the world, but things weren't as easy as they sounded. This was called a rushed approach that could complicate things on a larger scale, which Facebook has become known for. Then Facebook came up with Libra 2.0 with a toned-down, regulatory-friendly digital financial network.

Facebook initially planned to launch its digital currency in 2020, which didn't take off after a wave of bad publicity. After Libra digital currency debuted, it drew massive backlash from policymakers, regulators and common people concerning the possible disruption of the financial system, potential money laundering risk and devaluation of authorised currencies like the US Dollar. On top of that, going by Facebook's track record, user privacy was also one of the concerns. The group working on the currency project lost major partners like Visa and Mastercard due to opposition from regulators. It eventually narrowed down the plan to opt for multiple "stablecoins".

But it seems like the company is now preparing to set its foot with utmost caution this time, with the new name.