US Proposes Barring Big Tech Companies from Offering Financial Services, Digital Currencies
After Facebook Inc's proposed Libra digital coin aroused widespread objection, a House Financial Services Committee bill proposes a fine of $1 million per day for violation of such rules.
Representations of virtual currency are displayed in front of the Libra logo in this illustration picture. June 21, 2019 (Image: REUTERS/Dado Ruvic/Illustration/File Photo)
A proposal to prevent big technology companies from functioning as financial institutions or issuing digital currencies has been circulated for discussion by the Democratic majority that leads the House Financial Services Committee, according to a copy of the draft legislation seen by Reuters.
In a sign of widening scrutiny after Facebook Inc's proposed Libra digital coin aroused widespread objection, the bill proposes a fine of $1 million per day for violation of such rules.
Such a sweeping proposal would likely spark opposition from Republican members of the house who are keen on innovation, and would likely struggle to gather enough votes to pass the lower chamber.
Even if it were to pass the full house, it would still have to pass the senate which would also likely be an uphill struggle. Nevertheless, the draft proposal sends a strong message to large tech firms increasingly eyeing the financial services space.
The draft legislation, "Keep Big Tech Out Of Finance Act", describes a large technology firm as a company mainly offering an online platform service with at least $25 billion in annual revenue.
"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," it proposes.
Facebook, which would qualify to be such an entity, said last month it would launch its global cryptocurrency in 2020.
Facebook and 28 partners, including Mastercard Inc, PayPal Holdings Inc and Uber Technologies Inc, would form the Libra Association to govern the new coin. No banks are currently part of the group.
Last week, US President Donald Trump criticized Libra and other cryptocurrencies and demanded that companies seek a banking charter and make themselves subject to US and global regulations if they wanted to "become a bank."
His comments came after Federal Reserve Chairman Jerome Powell told lawmakers that Facebook's plan to build a digital currency called Libra could not move forward unless it addressed concerns over privacy, money laundering, consumer protection and financial stability.
Get the best of News18 delivered to your inbox - subscribe to News18 Daybreak. Follow News18.com on Twitter, Instagram, Facebook, TikTok and on YouTube, and stay in the know with what's happening in the world around you – in real time.
Subscribe to Moneycontrol Pro and gain access to curated markets data, trading recommendations, equity analysis, investment ideas, insights from market gurus and much more. Get Moneycontrol PRO for 1 year at price of 3 months. Use code FREEDOM.
Recommended For You
- First Details of The OnePlus TV Confirmed: It Will Have a 55-Inch QLED Panel
- Metz M55G2 4K Android TV Review: So Good, it Should Cost a Lot More Than Rs 42,990
- UN Rejects Pak's Criticism of Priyanka: Ambassadors Retain Right to Speak in Personal Capacity
- The Angry Birds Movie 2 Review: Saving the World, One Bird at a Time
- Jio Effect: Airtel V-Fiber Offers up to 1000GB Free Data & Plans Start at Rs 799