Silvergate Capital (SI) to be the Exclusive Issuer of U.S. Dollar Backed Stablecoins by Diem (FB)
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Silvergate Capital Corporation (NYSE: SI) announced a partnership with Diem Networks U.S. Inc., in which the Company’s wholly-owned subsidiary Silvergate Bank will become the exclusive issuer of Diem USD.
Diem has built a blockchain-based payment system to support financial inclusion and responsible financial services innovation. In this partnership, Silvergate will issue a U.S. dollar (“USD”) backed stablecoin, known as Diem USD, the first asset ever issued on the Diem payment system, which will enable the conversion of fiat USD to and from the stablecoin through a process known as “minting” and “burning.” The stablecoins can then be used by virtual asset service providers (“VASPs”) for a variety of use cases, which includes commerce between consumers and merchants, as well as cross-border payments.
“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. We’re excited to be at a place in the process where we can announce this product with confidence and look forward to continuing our work with Diem to bring this to market.”
In the months leading up to the announcement, Diem and Silvergate have been focused on ensuring the system is designed to meet regulatory expectations. Both organizations are continuing to prioritize technological and operational readiness for a pilot, as the parties finalize the terms of a definitive agreement.
"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. “We are committed to a payment system that is safe for consumers and businesses, makes payments faster and cheaper, and takes advantage of blockchain technology to bring the benefits of the financial system to more people around the world. We look forward to working with Silvergate to realize this shared vision.”
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