New bill would make Facebook’s cryptocurrency a security under the law

[alyssa85]

https://www.cnbc.com/2019/11/21/new-bill-would-make-facebooks-cryptocurrency-a-security-under-the-law.html

A new bill called the “Managed Stablecoins are Securities Act of 2019” would make Facebook’s libra cryptocurrency a security under the law.

A bipartisan team of representatives introduced the bill on Thursday, which could bring greater regulation to Facebook’s libra if passed.

The legislation follows Facebook CEO Mark Zuckerberg’s October hearing in front of the House Financial Services committee. One of the representatives introducing the bill said she was “disappointed” with his answers during the testimony.

Two members of the House Financial Services Committee, Reps. Sylvia Garcia, D-Tex., and Lance Gooden, R-Tex., proposed the “Managed Stablecoins are Securities Act of 2019” on the day of a committee hearing on the role of big data in financial services. Garcia explicitly called out libra in a statement announcing the bill, saying that it and other managed stablecoins “are clearly securities under existing law.”

Once it is a security it is subject to all the regulations that govern securities.

Most importantly, it would be regulated by American authorities (not Swiss as Facebook wanted) if any American used Libra.

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[actmyname]

Congress want to ban libra in any way

Well, obviously. When you have something disruptive to your monetary industry which offers control over other people, analogous to a religion, you would want to remove it as quickly as possible.

It's clear.

[panganib999]

Well, facebook IS large after all. Letting them roam free with their Libra would most probably result in an overhaul because of facebooks' popularity. Plus, them being restricted by the Congress shows that they could still overpower Facebooks' reputation, making them seem more of an above person type of guy? The alpha wolf in a wolf pack. It's basically an investment by theirs that uses power as its source.

[leavolnhals]

https://www.cnbc.com/2019/11/21/new-bill-would-make-facebooks-cryptocurrency-a-security-under-the-law.html

A new bill called the “Managed Stablecoins are Securities Act of 2019” would make Facebook’s libra cryptocurrency a security under the law.

A bipartisan team of representatives introduced the bill on Thursday, which could bring greater regulation to Facebook’s libra if passed.

The legislation follows Facebook CEO Mark Zuckerberg’s October hearing in front of the House Financial Services committee. One of the representatives introducing the bill said she was “disappointed” with his answers during the testimony.

Two members of the House Financial Services Committee, Reps. Sylvia Garcia, D-Tex., and Lance Gooden, R-Tex., proposed the “Managed Stablecoins are Securities Act of 2019” on the day of a committee hearing on the role of big data in financial services. Garcia explicitly called out libra in a statement announcing the bill, saying that it and other managed stablecoins “are clearly securities under existing law.”

Once it is a security it is subject to all the regulations that govern securities.

Most importantly, it would be regulated by American authorities (not Swiss as Facebook wanted) if any American used Libra.

This new bill really made it difficult for Libra and the company's formation rate has been greatly reduced. If everything was controlled by the government, it would be like Libra soon. Every transaction is subject to the government and under strict examination, the company will not be able to develop sustainably. because it will happen many problems during transactions and customers will also encounter many problems in authentication. this is really a bad news!

[Pearls Before Swine]

Once it is a security it is subject to all the regulations that govern securities.

Yes, but if I'm not mistaken bitcoin is considered a security under U.S. law, so this proposal makes sense.  In fact I thought *all* cryptocurrencies, including ico tokens, are considered securities.  Why would libra be any different?  Also if this is the extent of how the U.S. gov't plans to regulate libra, it isn't a deal killer in my opinion and I don't think this would keep it from launching.

When you have something disruptive to your monetary industry which offers control over other people, analogous to a religion, you would want to remove it as quickly as possible.

I'm not really certain that libra would disrupt much of anything, and there have been doubts in my mind as to whether it would achieve much adoption, unless facebook *forced* it on people, requiring that they use it instead of fiat.  I don't think most people have a problem paying for things online with fiat, except the unbanked but there hasn't exactly been a groundswell of people demanding that someone create a stable coin that they can use for...whatever.

[hatshepsut93]

I'm not really certain that libra would disrupt much of anything, and there have been doubts in my mind as to whether it would achieve much adoption, unless facebook *forced* it on people, requiring that they use it instead of fiat.  I don't think most people have a problem paying for things online with fiat, except the unbanked but there hasn't exactly been a groundswell of people demanding that someone create a stable coin that they can use for...whatever.

Exactly, all other payment methods like PayPal and Visa/Mastercard have a huge network effect, and they can even offer their customers some lucrative bonuses like cashback or miles. Facebook will have a hard time of getting users for their coin if it will ever get released, since they don't offer anything interesting with it - it's bad as cryptocurrency, because it's centralized, it's bad as a payment method, because it isn't convenient and well-adopted.

[lobat999]

https://www.cnbc.com/2019/11/21/new-bill-would-make-facebooks-cryptocurrency-a-security-under-the-law.html

A new bill called the “Managed Stablecoins are Securities Act of 2019” would make Facebook’s libra cryptocurrency a security under the law.

A bipartisan team of representatives introduced the bill on Thursday, which could bring greater regulation to Facebook’s libra if passed.

The legislation follows Facebook CEO Mark Zuckerberg’s October hearing in front of the House Financial Services committee. One of the representatives introducing the bill said she was “disappointed” with his answers during the testimony.

Two members of the House Financial Services Committee, Reps. Sylvia Garcia, D-Tex., and Lance Gooden, R-Tex., proposed the “Managed Stablecoins are Securities Act of 2019” on the day of a committee hearing on the role of big data in financial services. Garcia explicitly called out libra in a statement announcing the bill, saying that it and other managed stablecoins “are clearly securities under existing law.”

Once it is a security it is subject to all the regulations that govern securities.

Most importantly, it would be regulated by American authorities (not Swiss as Facebook wanted) if any American used Libra.

If that bill successfully becomes a law, I think it would most likely discourage the Libra Association from continuing the Libra project for fear of any possible issue or issues that may arise with regards to Libra's compliance on securities laws, which effectively puts the project in jeopardy since securities are tightly regulated which in effect could affect Libra operations in one way or the other.

I think its a brilliant move by the U.S. Government in an effort to try to have a certain control over the Libra project where the U.S. Government had doubts and fears on what could be perceived as a threat to its economic stability.

[hello_good_sir]

It's sooo, sooo obvious that the US government is doing anything in their power to stop Libra from launching, from smearing them in public to likely making some of their partners drop out, to now, where a new bill could possibly fuck Facebook over further.

It's always been an uphill battle for Libra, and I do think if this bill gets passed, it could very well be the final straw for their company, and it might be time to dump the project for another one - they tried to create something too public, and with their current influence, it would be very disruptive to the US economy.

[Hallmader]

I have to say that this law is sheer stupidity. A stablecoin is a security? How in this effin world is that possible? The lawmakers in the US are mostly out of their damn sane minds. Facebook's cryptocurrency is a stablecoin. It is nothing but a mere cryptocurrency version of their very own effin fiat money that is as useless as the one that represents it. Libra is plainly a currency. What makes it a security then?   

[lobat999]

I have to say that this law is sheer stupidity. A stablecoin is a security? How in this effin world is that possible? The lawmakers in the US are mostly out of their damn sane minds. Facebook's cryptocurrency is a stablecoin. It is nothing but a mere cryptocurrency version of their very own effin fiat money that is as useless as the one that represents it. Libra is plainly a currency. What makes it a security then?  

Well technically that proposed bill will not yet become a law until it passed the scrutiny and approval of lawmakers which could then be subjected to debates and discussions!

In fairness, I think filing that bill was very premature considering that Libra hasn't been officially launched yet in public. As such, I was wondering where did those lawmakers got the idea since I understand that Libra is technically not yet in existence and their decisions would be purely based on assumptions and imaginations!

Conversely, Facebook may have portrayed Libra as a stablecoin but such assertion is subject for debate since the initiators are mostly private business companies that the U.S. Government may classify it as a security. Interestingly, there is a framework by the Crypto Rating Council on classifying a digital asset if it is a security or not and would be glad to see whats their take on  this issue.

[hello_good_sir]

I have to say that this law is sheer stupidity. A stablecoin is a security? How in this effin world is that possible? The lawmakers in the US are mostly out of their damn sane minds. Facebook's cryptocurrency is a stablecoin. It is nothing but a mere cryptocurrency version of their very own effin fiat money that is as useless as the one that represents it. Libra is plainly a currency. What makes it a security then?  

Well technically that proposed bill will not yet become a law until it passed the scrutiny and approval of lawmakers which could then be subjected to debates and discussions!

I don't think it will actually get passed, it seems like a vocal section of the government that seems to despise Libra and Facebook, and I don't think it'll receive the overwhelming support that it needs to pass the bill.

In fairness, I think filing that bill was very premature considering that Libra hasn't been officially launched yet in public. As such, I was wondering where did those lawmakers got the idea since I understand that Libra is technically not yet in existence and their decisions would be purely based on assumptions and imaginations!

It seems like a safety move, a precaution in case Libra does ever launched, and since it hasn't been passed - I get the feeling it's the government shooting warning shots and basically suggesting Facebook to just abandon the problem.

Conversely, Facebook may have portrayed Libra as a stablecoin but such assertion is subject for debate since the initiators are mostly private business companies that the U.S. Government may classify it as a security. Interestingly, there is a framework by the Crypto Rating Council on classifying a digital asset if it is a security or not and would be glad to see whats their take on  this issue.

Perfectly said.

[Hallmader]

I have to say that this law is sheer stupidity. A stablecoin is a security? How in this effin world is that possible? The lawmakers in the US are mostly out of their damn sane minds. Facebook's cryptocurrency is a stablecoin. It is nothing but a mere cryptocurrency version of their very own effin fiat money that is as useless as the one that represents it. Libra is plainly a currency. What makes it a security then?  

Well technically that proposed bill will not yet become a law until it passed the scrutiny and approval of lawmakers which could then be subjected to debates and discussions!

I don't think it will actually get passed, it seems like a vocal section of the government that seems to despise Libra and Facebook, and I don't think it'll receive the overwhelming support that it needs to pass the bill.

If this proposed bill is a product of lawmakers, then there is high probability that their fellow lawmakers are as insane as the authors and sponsors of this particular bill and everything will be passed, at best with some minor amendments. Furthermore, please correct me if I am wrong but the overwhelming majority in that body despise Libra and Facebook, even cryptocurrency and Bitcoin. 

[blckhawk]

This could potentially bring Libra into the market, and things would look good for cryptocurrencies as the government starts to show interest in accepting and not banning cyrptocurrencies in total. However, the bill is still a proposed one and chances are there would be opposition that would counter/oppose this due to concerns in privacy of Facebook. Still though, a good sign of adoption but too much regulation would also hurt the market.

[BChydro]

Once it is a security it is subject to all the regulations that govern securities.
Most importantly, it would be regulated by American authorities (not Swiss as Facebook wanted) if any American used Libra.

So the focus is back to regulate what facebook started and now a new bill is proposed, these corporate big shots have the power to bend the rules if they want to come up with something and i hope this is what they will be looking and the US will have major control over the project to track each and every transaction. How these regulation and the token will come out will take a long time and by that time we will have another rally in bitcoin.

[ajaymukund]

Congress want to ban libra in any way

Well, obviously. When you have something disruptive to your monetary industry which offers control over other people, analogous to a religion, you would want to remove it as quickly as possible.

It's clear.

I think they do the right thing. Congress has its own reasons because a large enterprise like Libra that operates in a decentralized market is likely to cause major problems for the US economy and its neighbors. In the United States, they always control businesses very closely and Libra is really out of control of a normal business. so I have no idea unless Facebook is going to publish the internal balance sheet regularly for the SEC.

[alyssa85]

Yes, but if I'm not mistaken bitcoin is considered a security under U.S. law, so this proposal makes sense.  In fact I thought *all* cryptocurrencies, including ico tokens, are considered securities.  Why would libra be any different?  Also if this is the extent of how the U.S. gov't plans to regulate libra, it isn't a deal killer in my opinion and I don't think this would keep it from launching.

Zukerberg was arguing that as Libra was pegged to fiat currencies and was a stable coin, it was a currency. Whereas bitcoin, being unpegged to anything, was a security.

So it looks like Congress is fixing a loophole.

No one is going to use Libra instead of dollars if it is a security and you are liable to capital gains tax everytime you use Libra, but not when you use plain old dollars.

[proxydomain711]

As of now,  it's still a proposed bill. If it does get passed into a law, not only it would affect Libra, but also other stablecoins in the market with operating companies under the US Government. I see some points of the initiative of such move from the US Government:

1. It does mean that the government does not want only those volatile currencies without any real asset to back its value up, thinking it's a scam material.

2. It also proves that even the US Government saw the potential of blockchain-powered cryptocurrencies, just like what China did. They're just full of pride and does not want to immediately change stance from their president's explicit disagreement on Bitcoin and other cryptocurrencies.

3. Making this move makes these cryptocurrencies tagged as stablecoins legal under their jurisdiction, and it would be up to the law's final restrictions whether Libra and other stablecoins continue to thrive (if all things go well and midway two parties), or they would just abandon that idea because the passed bill would have too much demands.

[lobat999]

If this proposed bill is a product of lawmakers, then there is high probability that their fellow lawmakers are as insane as the authors and sponsors of this particular bill and everything will be passed, at best with some minor amendments. Furthermore, please correct me if I am wrong but the overwhelming majority in that body despise Libra and Facebook, even cryptocurrency and Bitcoin. 

Of course most of these lawmakers doesn't have any idea on any after effect if Libra becomes operational that is why they are speculating negatively including the idea that it could create a disruption upon the U.S. dollar and could have unintended consequences along the way.

Perhaps it would be fine to assume that these lawmakers are being lobbied constantly by most financial organizations that are anti crypto so we expect Libra will receive more pressure from lawmakers.

[Hallmader]

If this proposed bill is a product of lawmakers, then there is high probability that their fellow lawmakers are as insane as the authors and sponsors of this particular bill and everything will be passed, at best with some minor amendments. Furthermore, please correct me if I am wrong but the overwhelming majority in that body despise Libra and Facebook, even cryptocurrency and Bitcoin. 

Of course most of these lawmakers doesn't have any idea on any after effect if Libra becomes operational that is why they are speculating negatively including the idea that it could create a disruption upon the U.S. dollar and could have unintended consequences along the way.

Perhaps it would be fine to assume that these lawmakers are being lobbied constantly by most financial organizations that are anti crypto so we expect Libra will receive more pressure from lawmakers.

Exactly. The real battle is happening outside the hearings and the meetings. They happened outside the peering eyes of the media. All these public hearings and televised meetings are the mere surface. Behind all these are the real battles. Rich bankers asking time from the lawmakers. Influential businessmen negotiating with them, giving them offers, some of which many of these lawmakers cannot refuse. And when they appear in front of the people and the nation, they are but mere puppets.

[Dart18]

Why go to another bill just so the government could still control it.
They are giving Mark a lot of hard work and something to think.

There is a faster solution to it. Put it in the garbage and close it. Wait for the dump truck to take it then bury it. 
They are putting too much efforts into something that could also jeopardize their financial system.