On Thursday, US congress has introduced a bill that would classify Facebook’s cryptocurrency Libra as a security. The new proposed law is likely to bring up larger issues of regulation and inspection to Facebook’s crypto project that the company introduced as an electronic payment system.
Representatives Sylvia Garcia and Lance Gooden (Democrat and Republican from Texas) proposed the bipartisan bill titled ‘Managed Stablecoins and Securities Act of 2019’ during the same day of a committee hearing about the involvement of big data in financial services. Representative Garcia referred directly and named Libra when broadcasting the bill. She stated that Libra and other stablecoins are securities under the current law.
Representative Gooden claims that the bill is crucial in order to help users understand the financial and digital assets that they are purchasing. He stated that citizens have trusted companies marketing virtual assets as secure and stable. Gooden further added that investors need to know they can trust the developers of digital financial assets and the bill can provide them with the security that they need. The application of such laws would enable to regulate these virtual financial securities, as cryptocurrencies would be clearly defined.
Facebook Rebuffs Classification of Security for Libra
In July, during a congressional hearing, Facebook denied the notion that Libra is a security. David Marcus, Facebook’s crypto head said that Libra will be somewhat like PayPal in digital transactions and denied whether it is classified as a security or an exchange-traded fund (ETF).
For Libra to be recognized as a security means that it would have to face more regulatory obstacles. Facebook has claimed that it will not launch Libra without the approval of US regulators. Rep. Maloney asked at the October hearing with which regulators the company would engage, to which Facebook CEO Mark Zuckerberg replied that the company is willing to get all necessary approvals from any regulator who has authority over the Libra cryptocurrency.
Facebook has affirmed that the digital currency would be a stablecoin because it is backed by a basket of financial assets such as the US dollar; this is an attempt to separate Libra from securities and other digital currencies like Bitcoin(BTC)trade. At the New York Times DealBook conference this month, Marcus announced that he considers Bitcoin as digital gold instead of a currency.
Both representative, Garcia and Gooden, interrogated Mark Zuckerberg at the hearing back in October. Rep. Garcia was among the group of congresspeople who asked for Zuckerberg’s testimony, stating that she was disappointed after the hearing because she thought Zuckerberg would be the one to have the answers to many growing questions and worries about Libra.
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