Diem Association, New Name, and Same Problems

It is no secret that the Libra Association was struggling to gain recognition from lawmakers as well as regulators. Recently, the Libra Association made an interesting announcement. According to a press release, the Libra Association is changing its name to the Diem Association. Moreover, in its announcement, the Diem Association revealed its new logo. Interestingly, the new logo retained the purple theme, triple horizontal swooshes as well as the lower-case brand of the original Libra.

However, as it turns out, a new name won’t solve the problems. It is worth mentioning that, German Finance Minister Olaf Scholz voiced his criticism of the project. He made this comment after a conference between G-7 finance ministers and central bank directors. According to Olaf Scholz, changing its name would not change its fundamentals.

He noted that Facebook and Diem Association failed to adequately address its regulatory risks. People should take into account that the German government will not accept its entry into the market. It means the association has to cope with every problem if it wants to gain approval from German regulators.

Diem Association and legal aspects

As mentioned earlier, the Libra Association was trying to cope with various challenges. Moreover, Libra had already scaled down the ambition of its plans in a bid to please regulators. However, Diem Association still plans to create a new currency pegged to a basket of assets eventually, it would be a fully permissioned stablecoin that should enable easier regulation.

It is worth mentioning that, in October G-7 leaders made it clear that they would oppose the project until it fully complied with legal, regulatory, as well as oversight requirements. However, the statements did not specify which requirements the association should satisfy to gain approval. However, regulations represent one of the important problems.

Nevertheless, apart from regulations, there are other issues as well. According to Scholz, the currency monopoly should remain under the control of states. As a result, Diem’s refusal to drop its plans of creating a separate currency, even if supported by the G-7’s fiat currencies will continue to create obstacles for the project.

It won’t be easy for Diem Association to gain approval from regulators in Europe as well as other parts of the world. The Libra Association made the decision to change its name. However, as mentioned earlier this decision failed to impress the German government. The association should work with authorities from Germany and other countries to solve all issues.