The Diem Association, a consortium launched by Meta Platforms Inc. to develop a blockchain-based payment system, is reportedly winding down its operations.

The Wall Street Journal reported late Wednesday that the Diem Association plans to sell its assets to Silvergate Capital Corp. for about $200 million. Silvergate Capital is a La Jolla, California-based bank best known for providing financial services to companies in the cryptocurrency ecosystem.

The Diem Association emerged from a cryptocurrency initiative that Meta first announced in June 2019. The plan was to create a blockchain-based payment system and an associated cryptocurrency. Meta entrusted the management of the project, as well as the associated cryptocurrency, to a consortium of companies known as the Libra Association. That consortium is now known as the Diem Association.

As of last year, the group included Meta, Lyft Inc. and a number of other tech firms, as well as a long list of organizations from other sectors. The Diem Association’s initial backers also included Mastercard Inc. and Visa Inc., but the companies exited the consortium in 2019 along with other early participants. 

Over time, Meta’s vision for its planned blockchain-based payment system evolved significantly. 

The company originally planned to develop a cryptocurrency called Libra for the payment system. Libra would have been implemented as a so-called stablecoin tied to a basket of currencies. In April 2020, Meta refocused on developing multiple cryptocurrencies, each of which would have been backed by a single fiat currency.

CNBC last April reported that the Diem Association was aiming to launch a pilot program with a single stablecoin backed by the U.S. dollar in 2021. The consortium, which was originally incorporated in Switzerland, moved its operations to the U.S. as part of the effort. But Diem eventually didn’t launch the pilot, a decision that may have been tied to the reported regulatory scrutiny the initiative had received.

As part of its cryptocurrency initiative, Meta also developed a digital wallet called Novi. The company began piloting Novi last month, but without support for Diem. 

Silvergate Capital, the bank said to be acquiring Diem Association’s assets, would have reportedly issued some of the cryptocurrencies that the consortium planned to create. As part of the reported $200 million asset sale, Meta and a number of other Diem Association participants are expected to recover a part of their investments in the initiative.

Novi can be expected to become a bigger focus of Meta’s efforts in the cryptocurrency ecosystem going forward. The initiative is part of a broader strategy by Meta to expand into new markets that also encompasses technologies related to the metaverse. Last year alone, the company invested about $10 billion in the development of metaverse technologies such as augmented reality and virtual reality devices. 

Image: Diem Association