USA: a law to prevent the issuance of private cryptocurrencies
Regulation

USA: a law to prevent the issuance of private cryptocurrencies

By Marco Cavicchioli - 15 Jul 2019

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In the USA, a bill has been drafted to prevent large technology companies from functioning as financial institutions and issuing cryptocurrencies or digital currencies. 

The proposal, entitled “Keep Big Tech Out Of Finance Act”, was drafted by the democratic majority leading the House’s Financial Services Commission, the same people who sent Facebook a letter asking for the suspension of the Libra project. 

According to this bill, companies that fail to comply with this actual ban would risk a fine of up to $1 million a day

According to several analysts, such a proposal would probably arouse opposition from Republican members of Congress and those most passionate about innovation and would struggle to collect enough votes to be approved.

This proposal is most likely part of the ongoing clash between the Financial Services Commission itself and the Libra project and is intended to send a message to the other technology companies, following the statements of the Winklevoss twins. 

In fact, according to this bill, companies that would not be allowed to operate as banks and issue digital currencies are those that primarily offer an online platform service with at least $25 billion in annual revenue.

The proposal reads as follows: 

“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”.

This text seems to echo the words expressed a few days ago by President Donald Trump, who explicitly asked Facebook to operate as a bank, subject to all the relevant regulations, before issuing and managing its own cryptocurrency. 

In other words, there is a real clash that sees, on the one hand, the big global companies like Facebook, with billions of users, and on the other hand the Government and Parliament of the United States. The ground on which this clash takes place is that of the issuance and management of currency, with the Government and Parliament not tolerating the fact that private companies can create their own cryptocurrencies. 

This is a political, not a technical, clash, given that the governor of the Fed has made it quite clear that cryptocurrencies could possibly be issued by private companies, provided that they comply with all the regulations in force, including those on privacy and anti-money laundering. 

In short, the current exclusive administrators of monetary policy, whether direct or indirect, do not seem to tolerate competition very well, but their reaction so far still appears to be fragmented and disorganised. However, it cannot be excluded that at some point they will be able to organise themselves and develop effective reactionary measures.

Marco Cavicchioli
Marco Cavicchioli

Class 1975, Marco teaches web-technologies and is an online writer specializing in cryptocurrencies. He founded ilBitcoin.news, and his YouTube channel has more than 11 thousand subscribers.

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