US Bill Set To Restrict Tech Companies From Turning Into Financial Institutions

In light of concerns over Facebook’s digital currency, Libra, lawmakers in the U.S. are set to bar technology companies from turning into financial institutions through a new bill, the Keep Big Tech Out of Finance Act.

The enactment will restrict any tech companies with a global revenue of over $25 billion and will impose a $1 million-a-day fine, for violations.

The draft of the bill proposes that a large platform utility may not establish, maintain or operate a digital asset that is intended to be widely used as a 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. However, the bill is still unconfirmed and is being consulted by the House Finance Services Committee. But tech companies are now feeling the heat to stay away from the financial services sector.

The bill is being introduced in light of Facebook’s cryptocurrency Libra which is to be launched in 2020. The social media giant has collaborated with PayPal, Mastercard and Uber to govern the new coin.

President Donald Trump is the latest critic of Libra and other cryptocurrencies. Trump, according to CNBC, demanded that companies seek a banking charter and make themselves subject to U.S. and global regulations if they wanted to become a bank. Jerome Powell, the Federal Reserve Chairman, had also said that Libra could not move forward unless it addressed concerns over privacy, money laundering, consumer protection and financial stability.

Facebook has a long way to go though and breaching privacy is the ghost that comes back to haunt its CEO again and again.