For Immediate Release: February 1, 2022

Contact: Carter Dougherty, carter@ourfinancialsecurity.org

In response to news yesterday that the Meta (Facebook) backed Diem Association has been sold to California bank Silvergate, a financial institution friendly to crypto finance projects, the Americans for Financial Reform Education Fund and Demand Progress Education Fund released the following statement:

“Diem’s separation from Facebook is a welcome development for consumers, and anyone concerned about ensuring the stability, fairness,  and transparency of our financial system.

“The prospect of a private cryptocurrency issued by a powerful tech firm – already facing public anger because of its tight grip on the digital economy and deplorable record on privacy, surveillance, and promotion of extremism – should rightly have given policy makers and regulators chills. It is heartening to hear that a key factor in Meta’s decision to sell was that federal regulators were reportedly unwilling to greenlight the project based on their concerns about concentrations of economic power and mixing banking and commerce, and a need for more comprehensive guidance on regulatory oversight.

“But, even though Diem appears to have been a bad bet from the beginning, Big Tech’s desire to play a growing role in the financial services sector hasn’t flagged. A Diem by another name would still pose serious concerns regarding financial data privacy, market instability, and concentration of corporate power across the digital and financial sectors.

“The Administration should seize this moment to accelerate proposals to provide robust regulatory guidance and oversight of stable coins and cryptocurrencies, as well as pursue a true public option for basic financial services. The recent announcement by the Federal Reserve about the exploration of a central bank digital currency (CBDC) is a good first step.  The anticipated executive order from the White House on cryptocurrency later this month is an opportunity for the Administration to confront the problem.”

See the AFREF and DPEF paper on Diem (then called Libra) here.

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