Diem welcomes the opportunity to engage with members of Congress on the robust controls we have spent two years building into our payment system. Unfortunately, today’s letter from lawmakers to Facebook misunderstands the relationship between Diem and Facebook. Diem is not Facebook. We are an independent organization, and Facebook’s Novi is just one of more than two dozen members of the Diem Association. Novi’s pilot with Paxos is unrelated to Diem.
Diem’s blockchain-based payment system has been purpose-built for payments, and that is why we have prioritized consumer safety, financial stability, and combating financial crime. Furthermore, our independence is designed to foster competition and interoperability in payments.
The letter suggests that there has not been ‘a satisfactory explanation for how Diem will prevent illicit financial flows and other criminal activity.’ To the contrary, the Treasury Department’s Financial Crimes Enforcement Network has provided positive feedback on Diem’s financial crime compliance framework, and we believe we have the most robust controls in the industry. Unique in the industry, that includes not allowing anonymous transactions with unhosted wallets, until the illicit finance risks they entail can be adequately addressed.
Beyond financial crime compliance, we engaged extensively with an interagency regulatory team about the design of the project. As part of that review, we made adjustments to reflect feedback we received, and we were informed by a senior regulator that Diem is the best-designed stablecoin project that the U.S. government had seen.
When Diem comes to market we will do so having reflected the feedback of regulators from around the world and with confidence that Diem’s payment system is secure, will protect consumers, and will combat financial crime.”
About Diem
The Diem Association is a member-based association dedicated to building a blockchain-based payment system that supports financial innovation, inclusion, and integrity. Its more than two dozen members include merchants, payment service providers, social impact partners, and other entities. Diem Networks US is Diem’s primary operating entity. The Diem Payment Network offers a faster, lower cost way to make payments with robust controls to protect consumers and fight financial crime. It is designed to enable interoperability between network participants, which will drive competition and benefit consumers, and to complement public sector infrastructure and integrate with central bank digital currencies if they become available.