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How Will the Proposed "Crypto Bill" Impact Facebook?

Sejuti Banerjea

Based on the limited information currently available from media reports, the new bill proposing to block big tech from finance, may not have the desired impact on Facebook FB.

According to reports, the Democratic majority that leads the House Financial Services Committee, has proposed, in the "Keep Big Tech Out Of Finance Act," that "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 explicitly bans “large platform utilities from being a financial institution or being affiliated with a person that is a financial institution.”

Moreover, this large platform has been defined as a company whose main business is the operation of an online platform service with at least $25 billion in annual revenue. There’s also a proposed million-dollar daily fine for contravention.

So it does appear that the act is intended to stop the launch of or Facebook’s direct involvement in Libra immediately and deter big tech from getting into this line of business going forward.

The House Financial Services staff are expecting some opposition in the house, where it hasn’t officially been presented yet. But it has become a necessary topic for discussion and for deciding a regulatory framework on, given that Libra is slated to launch in 2020.

Impact on Facebook

Even if Facebook extricates itself from its “affiliation” to Libra, nothing can be done about the fact that the currency was developed with Facebook’s platform in mind. So it will work very well on Facebook. Since a new currency, especially of the crypto variety, needs largescale adoption to be successful, whatever the group responsible for the establishment, maintenance, or operation of the currency, will consider it prudent to leverage Facebook’s platform. So in the absence of a personal grudge, they might very well cut a deal with Facebook.

Facebook already has a plan of getting 100 interested industry players on board, including banks. Government regulation and oversight might actually facilitate the process.

Adoption beyond Facebook was a later goal and if Facebook gives up its affiliation, it may not benefit from this.


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