Finance

Silvergate Capital plans to buy some blockchain assets from Facebook’s Diem Group

Silvergate Capital shares surged in premarket trading on 1 February after announcing it was buying certain assets related to running a blockchain-based payment network from Diem Group, the Facebook-backed cryptocurrency project that is winding down.

The assets acquired by Silvergate, the company said in a statement, include development, deployment and operations infrastructure and tools for running the network.

Under the agreement, Silvergate said it issued more than 1.22 million Class A common shares to Diem and paid $50m in cash, for a total consideration of $182m.

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Silvergate shares were rising 10.6% to $119.20 in premarket trading on 1 February.

Silvergate said the acquisition of the Diem assets will help it launch a stablecoin in 2022.

“Through conversations with our customers, we identified a need for a US dollar-backed stablecoin that is regulated and highly scalable to further enable them to move money without barriers,” said Alan Lane, Silvergate’s chief executive officer, in a statement.

“As previously stated on our Q4 2021 earnings call, it remains our intention to satisfy that need by launching a stablecoin in 2022, enabled by the assets we acquired [on 21 January] and our existing technology.”

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Facebook, now Meta Platforms, launched the Diem consortium in 2019. It had been working with banking regulators in the US and abroad to win approval for its stablecoin. Diem had partnered with Silvergate Bank to issue the US-dollar based tokens.

Write to Joe Woelfel at [email protected]

This article was published by Dow Jones Newswires

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