The U.S. House of Representatives controlled by the Democratic Party has circulated a draft proposal of a new bill that will ban large technology firms such as Facebook, Apple, and Amazon.com from issuing their own cryptocurrencies or digital currencies.
The Democrats' draft legislation, the "Keep Big Tech Out Of Finance Act," will especially prevent Big Tech from functioning as financial institutions or issuing digital currencies.
Facebook has announced the launch of its new cryptocurrency called Libra in 2020 and it's unclear at this time what effect the Democrats' proposed legislation will have on the launch of this cryptocurrency.
The draft proposal sends a strong message to tech giants increasingly looking to the financial services sector to boost revenues and broaden their already formidable market clout.
The draft legislation 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," according to the draft legislation.
The Democrats have an unlikely ally in president Donald Trump, who in the past slammed Libra and other cryptocurrencies. Trump also demanded companies seek a banking charter and make themselves subject to the U.S. and global regulations if they wanted to "become a bank."
U.S. Federal Reserve Chairman Jerome Powell also expressed opposition to cryptocurrencies. In Libra's case, Powell told Congress that Facebook's plan to issue Libra can't move forward unless the company answers concerns over privacy, money laundering, consumer protection, and financial stability.
By the first half of 2020, Facebook intends to Libra and a new financial system built around its new digital wallet called "Calibra."
The open-source digital currency called Libra won't be run by Facebook. It will be run by the nonprofit Libra Association based in Geneva, Switzerland and supported by a number of companies and organizations.
Facebook said the goal of Libra is to become broadly accessible, stable and secure digital currency. Libra will be a "stablecoin" pegged to the U.S. dollar.
"If you buy $50 of Libra, your $50 makes its way to the Libra Reserve," said David Marcus, leader of Facebook's Calibra division.
"It's designed to be stable and confers values on Libra that makes it more like a traditional currency than any of the digital currencies are now. This is the way paper money was created."
