On Tuesday, Rep. Sylvia Garcia (D-Texas) presented a new bill before the Senate House Financial Services Committee to classify stablecoins under ‘securities.’ The bill, if passed, would extend to Facebook’s Libra as well.
The House of Financial Services Committee under Chairwomen Maxine Waters hasn’t been kind to Facebook about Libra. According to lawmakers, the proposed project raises two significant concerns. First is data privacy and exploitation by Facebook. Second, the shift of monetary control to private from government institutions.
Rep. Sylvia Garcia cities in her bill that in accordance with the 1933 Securities Act. The bill states that,
… digital assets, known as managed stablecoins, are investment contracts and therefore are securities
Moreover, it also demands an amendment to the definition of securities to include stablecoins in it. The issuers of stablecoins have argued in the past that managed stablecoins aren’t securities. However, the bill states that the value of stablecoins is backed by “in whole or in significant part, directly or indirectly, by reference to the value of a pool or basket of assets.”
Therefore, the management of these assets must fall under the pretense of the SEC. The bill echoes of the sentiments expressed in the two prior meetings on Libra with its’ associations’ head, Marcus David, and a panel of SEC chairpersons.
The new law, if passed, could also impact Tether which is the dominant stablecoin in the crypto markets. The market capitalization of USD-Tether is ranked 4th with a total of $4.1 billion.
Zuckerberg’s Testimony to Protect Libra’s Interest Today
Facebook’s Mark Zuckerberg will present his testimony and address the committee’s concerns today. The Financial Houses Committee has been skeptical of Facebook’s dominant role in it. However, Zuckerberg, like Marcus David, will try to ascertain the importance of the governing council and the actual control of Facebook in the crypto project.
Rep. Garcia who drafter the bill continues to be highly skeptic of Facebook getting hold of people’s financial data. The protection of the user’s financial data will one of her primary concerns. She tweeted,
Zuckerberg MUST address our concerns about the @facebook Libra Project.
Furthermore, the US Senate House should also look to compete with the Chinese Digital Currency plans. The global dominance of the Digital Renminbi could be detrimental to the US economy as well. Libra, along with Tether and other USD stablecoins, would maintain the supremacy of the dollar.
Do you think that the US lawmakers would give Libra a green signal as security? Please share your views with us.
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Nivesh from Engineering Background is a full-time Crypto Analyst at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com