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US proposes barring tech companies from offering financial services

A visual representation of digital cryptocurrency coins on display in front of the Facebook and Libra logos.

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A proposal to prevent large technology companies from operating as financial institutions or issuing digital currencies has been distributed for discussion by the Democratic majority led by the House Financial Services Committee, according to a copy of the draft of the legislation seen by Reuters.

In a signal of increasing scrutiny after the Libra digital currency proposed by Facebook raised a widespread objection, the bill proposes a fine of $ 1 million per day for the 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, PayPal and Uber, 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 look for a bank letter and be subject to US and global 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.

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