About

The Diem Association is a financial network focused on building a trusted and innovative payment system that provides people worldwide with access to safe and affordable financial services. Their primary goal is to reinvent money and create a more inclusive global financial system. The Diem payment system is designed to be accessible to anyone with an entry-level smartphone and data connectivity, and transactions are secure and fast. The system is built on blockchain technology and backed by a reserve of assets to ensure stability. The Diem Association is committed to compliance, consumer protection, and fostering an open and competitive network. They also provide resources for developers to build on the Diem Blockchain.

History

Origins Diem traces its origins back to 2017 when Diem (then Libra) co-creator, Morgan Beller, became the first person at Facebook's secret blockchain initiative. Months later, in a January 2018 New Year's resolution post, Facebook CEO Mark Zuckerberg expressed his desire to "go deeper and study the positive and negative aspects of" cryptocurrencies. On May 8, 2018, Facebook Vice President David Marcus announced that he would be moving from Facebook's Messenger division to lead Facebook's blockchain initiative.

In the months following the official launch of the project, Beller and Marcus recruited other top Facebook executives to join the group, including Libra's third co-creator, Kevin Weil. According to early reports, the idea was to create a stablecoin that could be sent to friends and family using Facebook's WhatsApp. By February 2019, there were more than 50 engineers working on the project.

In May 2019, it was confirmed that Facebook planned to launch a stablecoin backed by multiple currencies as part of a full payments network to enable the social platform's billions of users to make online purchases and transfer money between each other. Further reports revealed Facebook was recruiting multitudes of financial, commerce, and technology firms to help launch its network.

Libra Project Announcement On June 18, 2019, Facebook officially unveiled a new permissioned, blockchain-based payment system designed to enable the low-cost movement of money called Libra. Its token, Libra, would be a stablecoin fully backed by a basket of fiat currencies and government securities then called the Libra Reserve. The Libra Reserve would be held by a geographically distributed network of custodian banks, and managed by a network of exchanges that would provide on and off-ramps into local fiat currency based on an exchange rate. Facebook would develop a digital wallet for the project under its new subsidiary called Calibra (now called Novi), led by Libra co-creators, Morgan Beller, David Marcus, and Kevin Weil. Although the project would be permissioned at launch, the association aimed to begin transitioning the project to permissionless governance and consensus within the next five years.

The Libra blockchain and Libra Reserve would be governed by the Libra Association, an independent membership organization based in Switzerland, responsible for the governance of the Libra network and the development of the Libra project. 27 partners would form the initial members of the association, and were each required to invest $10 million for Libra Investment Tokens issued by the association, as part of their commitment. Members also needed to meet technical requirements to become validators on the Libra network.

Regulatory Pushback and Project Adjustments After the Libra project was unveiled, it quickly received strong push back from regulators around the world who expressed concerns over privacy and challenges to monetary sovereignty. As a result, just one month after the project was announced, Facebook assured that Libra would not launch until all regulatory concerns were fully addressed and it had the appropriate approvals. Facebook executives proceeded to go through a series of meetings and hearings with the United States Congress and various governments around the world to work through issues. In September 2019, it was reported that Libra's reserve basket would consist of 50% United States dollar, 18% Euro, 14% Japanese yen, 11% Pound sterling, and 7% Singapore dollar. Nevertheless, regulators were still not pleased and their anxieties remained.

In October 2019, PayPal became the first company to walk away from the Libra association, with several other founding members soon following. Since then a handful of new organizations have joined including Shopify and Tagomi. In January 2020 it was reported that the Libra Association was weighing a shift to multiple stablecoins backed by their own individual fiat currencies as opposed to a stablecoin backed by a basket of fiat currencies. Throughout this entire process, the Libra project continued to make progress towards launch while it worked with regulators.

Revised Plan and Rebrand On April 16, 2020, Libra unveiled its revised plan, headlined by the offering of multiple single-currency stablecoins, in addition to its multi-currency Libra Coin. Each single-currency stablecoin will be backed by a basket of fiat currencies and government securities, while the multi-currency coin (≋LBR) will instead be a digital composite of some of the single-currency stablecoins available on the Libra network, similar to Special Drawing Rights (SDR). ≋LBR will be implemented as a smart contract that aggregates single-currency stablecoins using fixed nominal weights.

According to the whitepaper, the changes address key concerns policymakers had regarding the potential for the multi-currency Libra Coin to interfere with countries' monetary sovereignty and monetary policies. Further changes made to appease regulators included the addition of a more comprehensive compliance framework, the abandonment of plans to transition Libra to a permissionless system, and the strengthening of the design of the Libra Reserve. The Libra whitepaper also indicated that it aimed to allow for easy integration of central bank digital currencies to replace corresponding single-currency stablecoins.

The Libra association has initiated the process of obtaining a payment systems license from the Swiss Financial Markets Supervisory Authority (FINMA), which would allow it to offer monetary and banking services. The association also plans to register as a money services business (MSB) with FinCEN, the Financial Crimes Enforcement Network, a key step towards offering currency exchange and transfer services in the U.S.

On May 26, 2020, Facebook's Calibra wallet subsidiary rebranded to Novi. On Dec. 1, 2020, the Libra Association rebranded to the Diem Association. The network also took on the new name, becoming the Diem network. Diem co-creators Morgan Beller and Kevin Weil have since left the project.