US government could block big tech firms from offering cryptocurrencies

A draft legislation suggests fining tech companies $1 million a day for violating newly proposed restrictions, according to Reuters.

After US Federal Reserve chairman Jerome Powell last week said “serious concerns” would need to be addressed before Facebook launches its Libra digital currency, a proposal seen by Reuters is now being circulated to stop large tech companies from functioning as financial institutions or issuing digital currencies.

The legislation has been shared by the Democratic majority that leads the House Financial Services Committee.

READ MORE: Facebook’s cryptocurrency under fire from the Feds

The bill proposes a fine of $1 million per day for violation of rules, and will likely come under fierce opposition from Republican members of the house and struggle to gather enough votes to pass the lower chamber. 

It’s unlikely such a sweeping proposal will make it through pass the senate, but the severity of its tone will send a clear message to big tech firms looking to move into cryptocurrencies. 

In June Facebook announced that Libra would launch next year, in a move it has billed as “potentially transformative” for the global finance sector.

The social media giant said it plans to make Libra available to its 2.4 billion monthly users in the first half of 2020.

To date 28 high profile companies including Mastercard, Visa, Vodaphone, Paypal, Ebay, Spotify and Uber have signed up to be founding members of the Libra Association, requiring each of them to invest a minimum of $10 million (£8 million).

Named, “Keep Big Tech Out Of Finance Act”, the draft legislation describes a large technology firm as a company mainly offering an online platform service with at least $25 billion in annual revenue.

“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,” it proposes.

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