Draft legislation entitled ‘Keep Big Tech Out of Finance Act’ is circulating within the USA’s House Financial Services Committee. Led by a Democratic majority, the proposal moves to prohibit Big Tech from issuing digital currencies or acting as financial institutions.
The draft classifies a Big Tech firm to be an organization offering an online service with a minimum of $25 billion in annual revenue. The bill proposes a fine of $1 million/day for being in violation of the proposed restrictions.
Big Tech Gets a Big (Pricey) ‘No’
Coming in mere days before Facebook’s Libra hearing, the legislation reads:
“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.”
The draft notes that ‘financial institution’ constitutes the following services, all of which Big Tech should be barred from engaging in or is affiliated with:
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an alternative trading system;
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a branch or agency of a foreign bank, as defined in section 1(b) of the International Banking Act of 1978;
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a broker;
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a commodity pool operator;
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a commodity trading advisor;
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a credit union;
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a dealer;
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a depository institution;
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a depository institution holding company;
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a futures commission merchant;
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an investment adviser;
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an investment company;
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a national securities exchange;
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an organization operating under section 25 or 25A of the Federal Reserve Act;
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a private fund;
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a State-licensed money services business; and
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any company engaged in activities that are financial in nature or incidental to a financial activity, as described in section 4 of the Bank Holding Company Act of 1956.
Facebook in Hot Water
July 16 is a big day for Facebook. Embroiled in two governmental appearances simultaneously, the social media behemoth will have to answer to the US government.
Together with Amazon, Apple, and Google, Facebook will appear before the House Antitrust Subcommittee. The focus of the appearance will be to examine the economic impact of the market power wielded by online platforms, specifically as it relates to innovation and entrepreneurship.
Simultaneously, Facebook will appear before the US Senate Committee on Banking, Housing, and Urban Affairs. The aim of the hearing is to examine Libra and the company’s data privacy considerations. Proceedings will be broadcast to the public.
Likelihood of Big Tech Legislation Being Passed
Politically, the bill would first have to gather enough voting support to pass in the lower chamber. Once the full House has been cleared, it would have to be approved at the Senate level, which could be a tough assignment should Republicans feel such lawmaking would oppose technological innovation.
Libra has caused widespread outcries from governments across the world over. Facebook and other Big Tech firms are increasingly being outed for anti-privacy issues and unrestricted domination. In the U.S., Senator Elizabeth Warren has called for the breakup of tech giants, ensuring that it will be a hot topic during the 2020 Presidential Election. In a blog post published earlier this year, Warren said:
“Today’s big tech companies have too much power — too much power over our economy, our society, and our democracy. They’ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else. And in the process, they have hurt small businesses and stifled innovation.”
The #breakupbigtech hashtag has since been trending on Twitter. While cryptocurrency enthusiasts aren’t often fans of regulatory clampdowns, this might be a very welcome exception to the rule. Moreover, since decentralized currencies like Bitcoin aren’t issued by an official body, this will only stand in its favor.
What is your stance on regulators intervening to preventing large tech companies from entering the cryptocurrency and finance space? Do you believe their unbridled global power should be dismantled? Let us know your thoughts in the comments below.
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