Key Points About Two Proposed Crypto Laws by the U.S. Congress
This year, the United States lawmakers are preparing bills to provide clarity concerning stablecoins and offer regulations for technology firms such as Facebook that could be interested in creating cryptocurrencies.
The House committee in charge proposed the draft legislation on July 15, 2019. This legislation particularly targets Libra by Facebook, and the proposal is aimed at restricting big tech firms from operating like financial institutions.
As in the draft legislation copy, a large tech firm is a firm providing an online platform service with minimum yearly revenue of $25 billion. Based on the definition, the bill particularly proposes that:
“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.”
However, Facebook can be categorised as a large tech firm, and the firm remains resolute to launch Libra, as it keeps developing the network of the digital currency today. The social network giant is likewise planning the introduction of various new features in the months ahead, as announced in a press release published on November 15, 2019.
Despite that the company is yet to schedule the release of Libra, regulators worldwide are expressing concern. Following the proposed legislation by the House, Chairwoman Maxine Waters voiced out her negative sentiments about Libra and asked Facebook to pause its plans while speaking on July 17, 2019.
Facebook has said nothing after the congressional hearings about the stablecoin while the proposed legislation would empower the U.S. financial regulators to assess fines up to $1 million each day for violations. Hence, the penalty for not meeting the stipulations of the legislation would make large technology firms think deeply prior to introducing their currencies and/or performing bank functions.
The U.S. Congress released a draft bill entitled “Stablecoins Are Securities Act” in October 2019. The purpose of the legislation is for the regulation of stablecoins, a cryptocurrency that lacks volatility, serves as a stable source of value, under the familiar Securities Act of 1933.
According to the bill:
“Because issuers of managed stablecoins nevertheless maintain that managed stablecoins are not securities, it is appropriate for Congress to provide clarity by amending statutory definitions of the term security to include managed stablecoins.”
It seems that the proposed legislation is targeted at Libra, which Facebook described in its whitepaper as a stablecoin pegged to a basket of fiat currencies. This means that the passing of the “Stablecoins Are Securities Act” bill will subject Libra to every law applicable to stocks and bonds. Later, Nancy Marshall-Genzer expatiated this in an article on January 1.
At the moment, it seems Facebook is still resolute to release Libra in 2020. Facebook has updated the Libra whitepaper. The biggest change is the elimination of dividends payable to early Libra investors while it mentions that changes may deal with concerns of Libra’s classification as a security.
Featured image courtesy of Encyclopedia Britannica. Source: Cryptopress.