Issuing a digital currency or providing financial services is not a straightforward process in this day and age. Especially for tech companies in the US, this uphill battle will become a lot steeper moving forward. A new legislative proposal would bar major companies from exploring these two business models. This could also spell trouble for Facebook’s Libra plans.
A Very Intriguing Proposal
Tech companies in the United States have a tendency to grow well beyond the scope of current regulations. That situation becomes even more problematic if those tech companies decide to enter the financial side of the spectrum. A recent example comes in the form of Facebook planning to launch its own digital currency. For now, that project has been put on hold, primarily because of regulatory pressure.
This new proposal submitted by the House Financial Services Committee may put an interesting spin on things. The bill would effectively bar major tech players from offering financial services in general. These companies would also pay a fine of $1n per day of violating these rules, which should dissuade most companies from even attempting to ignore the rules. A pretty interesting proposal, for rather obvious reasons, and one that will put the entire tech industry on notice.
Plenty of Opposition Ahead
Whenever a rather interesting proposal like this one comes to the forefront, it will be a matter of time until other politicians oppose it. Especially the Republicans of the HFSC will make their voice be heard in this regard. They want to push innovation in every sector, even if that includes making technology companies even more powerful than they already are today. Whether or not that is a good thing, remains to be determined.
Additionally, one has to keep in mind this proposal still needs to be approved by multiple parties before turning it into law. For now, it has yet to pass the house, let alone the Senate. It is still a very strong warning sign of what might yet be to come for the major technology companies in the United States. After all, tech and finance do not always mix well when centralized entities are involved in the process.
Licensing Concerns are a Factor
Even if this new draft bill would not be approved, technology companies still have to obtain a proper license prior to offering financial services and products. In the case of Facebook, there are genuine concerns regarding its digital currency, as numerous politicians have called out this venture specifically. There is always a chance the licensing process will become more difficult to tackle for technology companies in the future, depending on how the political landscape evolves.
No Impact on Bitcoin
As one would expect, these political squabbles have no real impact on Bitcoin or other cryptocurrencies. While it could force some tech companies to drop their cryptocurrency plans, it remains to be seen how things will evolve exactly. Bitcoin is not considered to be part of the financial ecosystem in the US at this time, thus it seems unlikely this bill will impact the ecosystem in any meaningful way.
Additionally, one might even go as far as claiming how this bill draft can be beneficial to the crypto industry. It shows tech companies should not try to mimic Bitcoin just as a way to gain more traction or make more money. Cryptocurrencies work on a different scale and level compared to traditional financial services and products. Anyone trying to copy this concept in a centralized manner will fight a steep uphill battle, which is only normal.
Disclaimer: This is not trading or investment advice. The above article is for entertainment and education purposes only. Please do your own research before purchasing or investing into any cryptocurrency or digital currency.