Diem Association, a digital currency project previously knows as Facebook’s Libra project, announced that it has dropped its plans to get a Swiss payments license and will instead focus on shifting its primary operations to the United States.

The crypto firm had sent in its application to the Swiss Financial Market Supervisory Authority (FINMA) in April 2020. The application was originally based on a stablecoin linked to a basket of currencies which was revised to reflect significant changes that were made to the project.

Despite its application already being in an advanced stage, Diem chose to withdraw its application from FINMA.

“While our plans take the project fully within the US regulatory perimeter and no longer require a license from FINMA, the project has benefited greatly from the intensive licensing process in Switzerland and the constructive feedback from FINMA and more than two dozen other regulatory authorities from around the world convened by FINMA to consider the project,”

said Stuart Levey, Chief Executive Officer of Diem.

Diem is planning to launch the payment system from the USA in a first phase because initially the project will focus on the USA as its target market and because it is now based on the US currency.

To make this happen, Diem announced a partnership between its wholly-owned subsidiary, Diem Networks US, and Silvergate Capital Corporation.

Under this partnership, Silvergate Bank will become the exclusive issuer of the Diem USD stablecoin.

Diem has built a blockchain-based payment system to support financial inclusion and responsible financial services innovation. Silvergate will become the exclusive issuer of the Diem USD stablecoin and will manage the Diem USD reserve.

Silvergate is a California state-chartered bank and a member of the Federal Reserve, and Diem Networks US will register as a money services business with the US Department of the Treasury’s Financial Crimes Enforcement Network.

Diem Networks US will run the Diem Payment Network (DPN), a permissioned blockchain-based payment system that facilitates the real-time transfer of Diem stablecoins among approved network participants. The formation of this partnership is an important step in preparation for a Diem USD pilot.

“Silvergate is a leader in financial innovation and an ideal partner for Diem as we move forward with a blockchain-based payment system that protects consumers and enhances the integrity of the financial system.

 

We are committed to a payment system that is safe for consumers and businesses, makes payments faster and cheaper, and takes advantage of blockchain technology to bring the benefits of the financial system to more people around the world. We look forward to working with Silvergate to realize this shared vision.”

added Levey.

“We believe in the future of U.S. dollar backed stablecoins and their potential to transform existing payment systems.

 

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. We’re excited to be at a place in the process where we can announce this product with confidence and look forward to continuing our work with Diem to bring this to market.”

said Alan Lane, Chief Executive Officer of Silvergate.

Featured image credit: edited from Unsplash

This article first appeared on fintechnews.ch