Amid concerns over Facebook’s upcoming digital currency, lawmakers in the United States have drafted a bill to keep major technology firms from becoming financial institutions.
Titled “Keep Big Tech Out of Finance Act,” the bill applies to tech companies with global revenue of more than $25 billion and will impose a fine of $1 million daily for any violation.
“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 draft of the bill proposed.
Although the origin of the bill is officially unconfirmed, according to multiple media reports, it is currently being discussed by the House Financial Services Committee.
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A major move by the lawmakers
A copy of the draft surfaced only days before the scheduled hearing of Facebook before the Senate Committee on Banking, Housing, and Urban Affairs on July 16, followed by another hearing before the House Financial Finance Committee on the next day. The social media giant has to clarify privacy-related concerns surrounding Libra in both hearings.
The political turmoil around Libra was fueled further by unexpected tweets of US President Donald Trump against Bitcoin and cryptocurrencies. He also criticized Facebook’s attempt to enter the financial industry and asked the company to follow the process of the banking charter if it wants to provide banking services.
….Similarly, Facebook Libra’s “virtual currency” will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National…
— Donald J. Trump (@realDonaldTrump) July 12, 2019
Apart from in the US, the social media company is also facing resistance from regulators in most parts of the world. It has already confirmed that it will not introduce any crypto-based services in India, its largest market, due to the hostility of the authorities towards the sector.