The House Financial Services Committee is discussing the “Keep Big Tech Out of Finance Act”, draft legislation that would prohibit large technology companies like Facebook and Amazon from offering cryptocurrency and other financial services. The bill was proposed after Facebook announced that their cryptocurrency Libra would launch in 2020, causing public backlash. President Trump demanded that Facebook seek a banking charter if it wants to “become a bank,” while Jerome Powell, Chairman of the Federal Reserve, told lawmakers that Libra could not move forward until it addresses his concerns regarding:
- Consumer protection
- Financial stability
- and Money Laundering.
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Facebook plans to launch its global cryptocurrency with 28 partners, including Mastercard, Paypal, and Uber while not including any banks.
Under the bill, companies would be fined one million dollars each day that it offered financial services or cryptocurrency, according to a report from Reuters. As the House Financial Services Committee has a Democrat majority, this proposal is likely to garner opposition from Republican House and Senate members who are “keen on innovation,” wrote Pete Schroeder and Ismail Shakil in the Reuters article.
The proposed legislation defines Big Tech as a company with an online platform that has $25 billion or more in annual revenue. It reads,
“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.”
Regardless of whether the draft legislation passes or not, it is clear that the government is keeping an eye on large technology firms and their financial services.