(Reuters) – The Democratic majority that heads the House Financial Services Committee has circulated a proposal to prevent large technology companies from operating as financial institutions or issuing digital currencies, according to a draft copy of the legislation seen by Reuters.
Small toy figures are seen in virtual currency representations in front of the Libra logo in this illustration, June 21, 2019. REUTERS / Dado Ruvic / Illustration
In a sign of increased scrutiny after Facebook Inc (FB.O) Libra's digital currency proposal raised a widespread objection, the bill proposes a fine of $ 1 million per day for violation of such rules.
Such a general proposal would likely provoke opposition from the Republican members of the House of Representatives who are interested in innovation and are likely to struggle to gather enough votes to move to the lower house.
Even if it were to pass the full house, I would still have to approve the Senate, which would probably also be an uphill struggle.
However, the draft proposal sends a strong message to large technology companies that increasingly look at the financial services space.
The bill, "Keep Big Technology Out of the Law of Finance," describes a large technology company as a company that primarily offers 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 intended to be widely used as a medium of exchange, unit of account, storage of value or any other similar function, as defined by the Board of Governors of The System of Federal Reserve ", he proposes.
Facebook, which could qualify to be such an entity, said last month that it would launch its global cryptocurrency in 2020.
Facebook and 28 partners, including MasterCard Inc (MAN), PayPal Holdings Inc (PYPL.O) and Uber Technologies Inc (UBER.N), would form the Libra Association to govern the new currency. No bank is currently part of the group.
Last week, the president of the United States, Donald Trump, criticized Libra and other cryptocurrencies and demanded that companies seek a bank letter and submit themselves to US and world regulations if they want 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 about privacy, money laundering. , consumer protection and financial stability.
Report by Ismail Shakil in Bengaluru and Pete Schroeder in Washington; Edition by Susan Thomas