Facebook’s announcement of its biggest financial venture called Libra has prompted multisectoral discussion among tech companies, banking, and financial ecosystem, as well as government and regulatory official regarding the effect of cryptocurrency and digital money on the global economy.
The polarized discussion has seen lawmakers and executives on the opposite side of the poles arguing the harms of allowing tech giants like Facebook to issue currencies that have the potential of disrupting banking systems around the world.
Some say that it is on its way to a full-blown legal and social battle between regulators and the tech stratosphere. Some even suggest that this war has already begun.
A new draft proposal for the bill, bluntly named as “Keep Big Tech Out Of Finance Act,” that circulates among Democrats majority that leads the U.S. House Financial Services Committee, proves that the US government is not joking about its position against Libra and other similar ventures in the future.
According to the proposed bill, no tech company should be allowed to issue any form of financial services. “A large platform utility may not establish, maintain, or operate a digital asset that is intended to be widely used as a medium of exchange, unit of account, store of value, or any other similar function, as defined by the Board of Governors of the Federal Reserve System,” reads a copy of the bill obtained by Z6Mag.
Furthermore, while the bill does not specify any company, it clearly refers to Facebook, and it’s planned blockchain-based currency, Libra. The “large platform utility” is defined as a technology company with “an annual global revenue of $25,000,000,000 or more” and one that is “predominately engaged in the business of offering to the public an online marketplace, an exchange, or a platform for connecting third parties.” This definition seems to be crafted to include Facebook rather than exclude other companies.
It is also worth noting that the proposed legislation also prohibits “large platform utilities” from affiliation with “persons who are a financial institution.” This further includes Facebook’s proactive workaround against possible future laws that may prohibit them from owning Libra.
Libra is actually not owned by Facebook. Instead, it is governed by a group of companies that are based in Switzerland called the Libra Association with Facebook as one of its founding members.
Nonetheless, the bill is still on its earliest phase yet, and many could happen to move forward. For it to become a law, it still has to withstand the possible opposition by Republicans in both the House and the Senate.
But it seems like the bill has an unlikely ally in the person of Donald Trump as the new proposal came out after Trump criticized cryptocurrencies.
In a series of tweets on Thursday, the POTUS said that he is not a “fan” of cryptocurrencies, asserted that America has only one currency, criticized bitcoin, as well as told Facebook that they need a banking charter if they want to launch their newly announced crypto-based money called Libra.
Trump said cryptocurrencies are not money, and “Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity.”
“If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations,” said the president.
According to the President, the dollar is the only currency in America, and Libra, among other cryptocurrencies, are not “real money.”
“We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States Dollar!” Trump said in a tweet.
Trump’s sentiments echoed similar apprehensions from cryptocurrency critics who have been advocating against the growth of the “volatile” blockchain technology and crypto money. Many argue that those attributes count against the wider adoption of digital currencies.