Ever since Facebook announced its digital asset one month ago, the broader cryptocurrency space has been subject to immense levels of scrutiny from global governments. Case in point, the unveiling of Libra, a Facebook initiative backed by corporations from Uber and Spotify to Visa and Booking Holdings, triggered a few tweets from Donald Trump.
Per previous reports from Blockonomi, the American leader lambasted Bitcoin and decentralized cryptocurrencies, calling them volatile, inherently invaluable, and a medium for criminal/illicit activity.
The President went on to disavow Libra, claiming that it should comply by banking charters and that it will not be a proper replacement for the U.S. Dollar, the “strongest” currency.
It seems that Trump’s aversion towards Libra and non-US-government-backed monies is already coming to fruition. Revealed on the weekend, U.S. Representatives may be looking to disallow “Big Tech” from delving into financial services.
It seems that the request for a moratorium on Libra from Maxine Waters and other House Representatives wasn’t enough. According to a recent document, Facebook and other Silicon Valley giants may soon be disallowed from entering finance in any notable fashion.
Titled “Keep Bitcoin Tech Out of Finance Act“, the out-of-left-field draft bill would also ban big names in technology from “establishing, maintaining, or operating a digital asset” that is meant to fulfill the three fundamental tenets of money: medium of exchange, unit of account, and store of value.
Firms that fit into the bill’s jurisdiction are technology firms that sport an annual revenue of over $25 billion and are focused on offering marketplaces, exchanges, or mediums in which individuals and groups can connect (social media). Should the bill pass, those in violation of the legislature’s terms will be subject to a fine of $1 million… daily.
Sources say that the bill may soon be brought up in front of the House Financial Services Committee staff.
This draft bill comes hot on the heels of a scathing comment on Libra from Jerome Powell, the chairman of the Federal Reserve. Speaking to the Senate Banking Committee, the central banker revealed that Libra needs to be “thoroughly and publicly assessed and evaluated before this proceeds.”
The Bill May Be Justified
While the bill has been deemed as some as the government’s attempt to stop the growth of alternative monies, it may be to prevent financial risk. As reported by Blockonomi previously, the Bank of International Settlements wrote in a study that technology companies dipping their toes on finance may pose a direct threat to “financial stability” and “data protection”.
The entity’s researchers explain that once Big Tech’s enticing financial services trap consumers, entry barriers can be raised and competition can be stamped out, creating a monopolistic system that may actually hurt mom & pop investors. This act would harm Wall Street institutions, potentially making such banks and funds useless in a world where technology executives have the keys to the financial system.
And as Powell added in his aforementioned comment: “I think we agree that Libra raises a lot of serious concerns, and those would include around privacy, money laundering, consumer protection, financial stability.”
David Marcus, the VP of Blockchain at Facebook, has, however, come out to ensure regulators that Facebook and its partners will be within the law. In a Facebook post and letter issued to Congress, the former PayPal president gave his “personal assurance” to the government that everything will be done right and that all questions will be properly answered.
Power of Bitcoin
While this bill could show just how much power governments wield, it accentuates the value proposition of decentralized monies like Bitcoin. As many commentators have noted, BTC cannot be shut down by bills from American politicians or moratoriums. This may just be the silver lining in this unfortunate case of corporations and governments butting heads.