La Jolla-based Silvergate Bank announced Wednesday that it will issue dollar-backed digital currency in partnership with the international Diem Project.
The Diem USD currency is backed by social media giant Facebook and was originally known as the Libra.
In connection with the Silvergate announcement, backers are moving the project’s headquarters to the United States from Switzerland and will seek regulatory approval here.
“Silvergate is a leader in financial innovation and an ideal partner for Diem as we move forward with a blockchain-based payment system that protects consumers and enhances the integrity of the financial system,” said Stuart Levey, chief executive officer of Diem.
Silvergate, a community bank that provides commercial lending, has been involved in other cryptocurrency projects and said it is committed to “reshaping global commerce for a digital currency future.”
“We believe in the future of U.S. dollar-backed ‘stablecoins’ and their potential to transform existing payment systems,” said Alan Lane, chief executive officer of Silvergate. “We’re inspired by Diem’s technology and commitment to building a regulatory compliant payment system that offers a safe and secure way to move money.”
Stablecoins are designed to avoid the wide price swings seen in cryptocurrencies like bitcoin that aren’t controlled by a single authority..