It has only been a month since Facebook announced its plans to launch Libra, the first ever cryptocurrency to come out of a large-scale social media platform.
During this short time, various lines of criticism have drawn out from an array of discussion platforms – and the latest of them seems to be coming from the U.S. government itself.
According to several sources, the U.S. House of Representatives is currently working on a bill that would stop Big Tech such as Facebook from issuing its own cryptocurrency. It is being noted that the move is being taken in the name of financial stability and to keep the companies from yielding too much power with the issuance of a financial instrument.
U.S. Government Isn’t Too Keen on Big Tech Having Cryptocurrency-Level Power
According to Reuters, the U.S. House of Representatives, which is currently controlled by the Democratic Party, is in the process of passing a bill that would propose restrictions on big technology companies from issuing financial securities such as cryptocurrencies.
The news comes in the wake of Facebook doubling down on its decision to roll out its own cryptocurrency, for which it has already devised its plans of distribution.
The bill, which is still in the status of being drafted and finalized, specifically highlights those companies that make a large chunk of revenue through their everyday operations.
Aptly named the “Keep Big Tech Out Of Finance Act”, the draft legislation describes such firms as offering their main services online with an annual revenue of at least $25 billion.
The text of the proposed legislation mentions that any company which meets the aforementioned criteria cannot get involved in the issuance, management or operation of a cryptocurrency. Specifically, the draft text, as obtained by Reuters, states the following.
“A large platform utility may not establish, maintain, or operate a digital asset that is intended to be widely used as 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.” The text reads.
This means that the “large platform” in question, such as Facebook, would be effectively prohibited from issuing its own cryptocurrency if the draft legislation is to pass.
In the event that such an entity goes ahead with its plans anyway and violates the rules set out by the passed resolution, then it would be subject to a fine of $1 million per day.
Such restrictions are all covered at length within the draft legislation itself. According to reports, the proposal might be welcomed with wide arms by the Democratic House of Representatives. But at the same time, it would have quite some issues in passing the Senate floor, where the Republican Party controls the majority.
Given that both parties within the Legislative branch of government have been at odds lately, it is not a surprise to see this assumption by experts. In the past few months, the House and the Senate have been going in different directions even after the President and the House Speaker’s talks of bipartisan efforts. But the stance towards or against cryptocurrency seems like something where these branches of government might find common ground.
Why the Bill Might Not Get a Hard Time
As of late, the growing talks about cryptocurrencies have gained newfound traction, which is in large part to Facebook’s decision to delve into this sector.
It even prompted President Donald Trump to chime in with his views, who had mentioned at the time that any institution that wants to issue its own cryptocurrency and effectively act as a bank should go through all regulatory processes that are currently associated with banks.
The President did not stop there, but went on to share his views against more traditional cryptocurrencies such as Bitcoin, mentioning that they were “not money” and thus shouldn’t be treated as such.
While that rhetoric got shut down by a few experts who explained that any financial instrument utilized for exchange of goods and services is money, the exchange did point out that even POTUS, in his own words, is “not a fan” of cryptocurrencies.
The House of Representatives hasn’t given any indication that it is completely against any and every cryptocurrency. But it is also clearly not about to don the colors of any cryptocurrency that is issued by big tech. That is where it meets halfway with the President’s extremely negative review of all cryptocurrencies.
This puts Facebook at odds directly with the government, which ironically is exactly what it has been trying not to do ever since its data scandal debacle of 2018.
Facebook is All Ready to Create a Financial System of Its Own
When Facebook announced its plans to launch Libra, it wasn’t just coming out with a new blockchain property that was completely controlled by the company. Instead, the social media behemoth – which also controls WhatsApp and Instagram – had revealed to the press that its cryptocurrency would work on a governance model that includes stakeholders such as Uber, eBay, and Spotify.
Each of these members became part of the Libra Association, a nonprofit that works towards the increased adoption of the cryptocurrency. Each of these entities paid $10 million to have voting rights on the platform, which was a step taken by Facebook to demonstrate that it did not operate Libra through a monopoly over its functions.
But these efforts to hand out voting rights to the super wealthy has not been enough in the eyes of many critics. Critics look at the cryptocurrency as Facebook’s way to breach into the financial system when it hasn’t really been responsible with the non-financial yet precious data of users that it has obtained over the past few years.
Facebook has setup the infrastructure to launch Libra to the public in 2020. It is already working on finalizing its Calibra wallet that would allow users to transfer funds to each other at almost no transaction fees. And it has already rolled out the whitepaper that is essential to any cryptocurrency’s launch these days.
But this particular news of a draft legislation that specifically targets Facebook’s efforts for launching its own digital asset certainly rains on the social media behemoth’s parade.
For now, it remains to be seen how soon this bill will go on to the House and Senate floors, and what would happen in case it does gets past the legislative barriers.
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