“Keep Big Tech Out of Finance Act” proposes $1 million per day fine on large tech companies acting as financial institutions
A recent bill, “Keep Big Tech Out Of Finance Act,” recommends prohibiting giant tech firms from serving as financial institutions or launching their own cryptocurrency. Likely geared toward Facebook, the bill was reviewed by Democrats that oversee the House Financial Services Committee.
Bill meant for Facebook?
According to a report from Reuters, a copy of the drafted legislation suggests a fine of $1 million per day be imposed on tech companies that attempt to provide services similar to those offered by financial institutions or make plans to issue their own cryptocurrency.
Notably, U.S. Republican party members might oppose proposals that recommend banning technology firms from providing financial services. Newly proposed legislation that suggests preventing private tech companies from issuing digital currencies may not receive enough votes to be approved by the U.S. House of Representatives.
If the proposed bill manages to pass the lower chamber, it would then have to be approved by the members of the Senate. According to the bill, an internet-based platform that generates a minimum of $25 billion in yearly revenue may be considered a “large tech company.”
As noted in the drafted legislation, large tech firms are prohibited from “establishing, maintaining, or operating” digital asset-related services, which may be used as a medium-of-exchange (MoE), a unit of account, or a store-of-value (SoV).
Criticism from politicians and regulators
Facebook, which recently released a whitepaper for its Libra stablecoin project, likely qualifies as a large tech company as it intends to launch both the Libra cryptocurrency and its Calibra wallet at some point in 2020. However, lawmakers throughout the world have heavily scrutinized Facebook’s crypto plans and have also asked the social media giant to halt its controversial project.
Facebook’s management has not yet partnered with banks in order to develop its Libra cryptocurrency. Members of the Libra Association, an organization that will maintain the Libra Blockchain by appointing validators, currently include Mastercard, Paypal, Uber Technologies, among several others.
President Donald Trump has been critical of the Libra project and other cryptocurrencies, including the world’s most dominant digital asset, Bitcoin. President Trump asked tech firms to comply with the appropriate regulatory guidelines if they intend to provide financial services.
The U.S. President’s comments appeared to have come in response to statements made by Jerome Powell, the Chairman of the U.S. Federal Reserve. Powell had informed legislators that Facebook’s plan to launch its own cryptocurrency would not be approved until it ensured that adequate measures had been taken to prevent illicit financial activities while also protecting customer privacy.