Facebook – the third most visited website in 2020 and the number one social media platform – is developing a new cryptocurrency, which is estimated to launch at the beginning of 2021. Facebook first announced the new type of currency in the middle of 2019. The new currency Diem – previously known as Libra – is under supervision in Switzerland and the United States, after receiving the required permissions by the authorities the new currency will launch immediately. The underlying idea of the Diem currency is that even though emerging countries perform better every year in terms of financial environment, there is still around 1.7 billion people who do not have access to even basic financial services and these are in the focus of this new product.
Diem is planned to be backed one-for-one by US dollar and Facebook has further plans to create a platform for more multiple cryptocurrencies. Diem is also backed by technology companies, such as Spotify, Uber and many venture capitals such as Andreesen Horowitz or Union Square Ventures. The supporting companies form the ‘Diem Association’, which is established in Geneva, Switzerland. The main goal of this association is to oversee the creation and operation of the new cryptocurrency.
Regulators among the world have expressed their concerns about the new technology that Facebook intends to implement. German and French financial leaders have stated that Facebook shall not become a “shadow bank”, and that it could undermine democracy and financial stability of the European Union.