In an attempt to safeguard consumers, the US government has presented a draft bill that aims to ensure that large tech companies can’t offer digital currencies, or operate as financial institutions in any way. Drafted as a response to emerging news about social media network Facebook’s attempt at developing a cryptocurrency named Libra, the bill attempts to ensure that any business operating as a financial institution would need a charter to do so.
The bill is likely to stifle the freedom of innovation for cryptocurrencies and blockchain alike and could impact the US competitiveness on the world market as these technologies advance. Luckily, the draft bill still needs to get past the lower house and will likely have a hard time getting supporters because of how heavily it could impact business entities. The draft of the bill outlines a ‘large technology firm’ as one that offers an online platform service that makes more than $25B annually. While the law does not explicitly state that Facebook is its target, the implications are apparent.
Governmental Control of Currency?
Cryptocurrencies, whether run by large international consortiums or as an ad-hoc network of users, form a statement about the freedom of the individual to control his or her finances. The passing of this bill would not only impact Facebook but also effectively kill other innovative blockchain cryptocurrencies that have a large enough market cap. The result is that this potential law will severely impact research into the technology for its non-financial implementations.
Federal Reserve Chairman Jerome Powell stated that Facebook; s idea of Libra currency should not move forward until the company addressed concerns over the privacy of data, security of the platform, means of dealing with money laundering, consumer protection, and stability of the currency. While it’s unlikely that the US government will pass a bill as draconian as the Keep Big Tech Out Of Finance Act, the fact that such legislation can be drafted shows a distinct lack of appreciation for the reason cryptocurrencies exist.