Silvergate Capital Corp. has acquired Facebook’s Diem Group’s blockchain payment network, the California-based provider of financial solutions for the emerging digital currency industry announced Monday (Jan. 31).
Under the terms of the deal, Silvergate has issued 1.2 million shares of Class A common stock to Diem and paid $50 million in cash for a total $182 million.
Silvergate, a holding company for a small bank in California, serves more than 1,300 bitcoin and blockchain companies as of the third quarter of 2021, according to the company’s website.
The bank had struck a deal with Diem in May to issue some of the stablecoins, which are a central component of Diem’s business.
The announcement ends a nearly three-year journey by Facebook, now called Meta, to launch a digital currency. Meta CEO Mark Zuckerberg is seeing the demise of his cryptocurrency project due to regulatory pressures.
The Diem Association, which used to be known as Libra and which is backed by Meta, considered selling its assets as a way to potentially return capital to investor members.
Read more: Facebook Eyes Sale of Diem Assets
The acquisition is expected to advance Silvergate’s technologies and enhance its stablecoin infrastructure initiative, the company said.
Among the resources acquired by Silvergate include development, implementation, and operations infrastructure as well as tools for operating a blockchain-based payment network designed to expedite payments for eCommerce and cross-border transactions.
The network has been operating on a test basis and was built by a team of engineers over the last two years. It promises to be secure, reliable, and scalable, the company said. Also included in the agreement is proprietary software essential to running a regulatory-compliant stablecoin network.
The partnership with Diem has allowed Silvergate to become familiar with the network and develop an appreciation for its potential to allow a Silvergate-issued stablecoin that will advance the future of global payments.
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