Facebook Calibra wallet. Image credit: Facebook
After President Trump’s recent negative comments on cryptocurrency, including Facebook’s Libra digital currency, the U.S. House has prepared a bill that would essentially ban big tech companies from being involved in any way in the finance industry. The move seems primarily directed at Facebook’s involvement in the Libra project.
Meanwhile, Treasury Secretary Steven Mnuchin warned that digital currencies such as Facebook’s Libra or even more conventional cryptocurrencies such as Bitcoin pose a threat to national security.
“Cryptocurrencies such as bitcoin have been exploited to support billions of dollars of illicit activity like cybercrime, tax evasion, extortion, ransomware, illicit drugs, and human trafficking,"
He added that cryptocurrencies "could be misused by money launderers and terrorist financiers.”
The Chairman of the Federal Reserve, Fed chair Jerome Powell, also said recently that the Libra project “cannot go forward” until “serious concerns” are addressed. Facebook’s David Marcus, the head of Facebook’s Calibra, responded in a recent testimony for the US Senate Banking Committee that the Libra Association will be regulated under Swiss law. The Libra Association will be the organization that will govern the Libra digital currency and will be headquartered in Switzerland.
However, Marcus also said that American services that will use the Libra digital currency, including Facebook’s own Calibra wallet for the Libra currency, will still be governed by U.S. money transmitting laws.
U.S. House Goes after Big Tech-Run Cryptocurrencies
Some members of Congress and government officials people have made it no secret that they don’t like Libra or conventional cryptocurrencies because they believe they are a threat not just to national security, but also to the U.S. dollar. Libra will attempt to fulfill Bitcoin’s vision of a world digital currency, but instead of being a fully decentralized cryptocurrency, the Libra currency will be controlled by some of the largest technology companies.
Facebook will spearhead its development and likely control the future of the Libra currency for the foreseeable future, not unlike Google has managed to be the primary developer and the company in charge of the Android Open Source Project.
Although Facebook has promised that Libra will not pose a threat to national currencies, the U.S. House doesn’t want to take any chances. Some Democrats, led by Rep. Maxine Waters (D., Calif.), have begun to consider a new bill, called Keep Big Tech Out of Finance Act, for an introduction on the House floor.
If the bill passes and becomes law, Facebook may be forced to cut its ties to the Libra Association, at least in the United States. The bill also bans other “large platform utilities,” defined as tech companies making over $25 billion in revenue a year from being affiliated with a financial institution.
Even if Facebook cuts its losses in the U.S. and attempts to provide Libra currency elsewhere, it probably won’t have too much success. Several European national governments have also pushed back against Libra, warning that it must not be allowed to become a sovereign currency or to replace the euro.