Jan 1, 2020

Congress isn’t going to let Facebook’s cryptocurrency happen without a fight

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Lawmakers seem hesitant about Big Tech wading into global finance.

This week, we’re talking to Marketplace reporters about what to expect from tech in the year ahead. Regulation is a big part of that conversation, and today we’re going to chat about cryptocurrencies, specifically Libra, the digital payments system and cryptocurrency proposed by Facebook earlier this year.

It seemed like Libra might be dead on arrival considering all the backlash, but lawmakers haven’t forgotten about it. There are a few bills being considered by Congress that could have an impact on Libra’s future, including who might regulate it.

I spoke with Nancy Marshall-Genzer, who reports on policy from Marketplace’s Washington, DC bureau, and asked her to tell me about the bills that have been proposed. The following is an edited transcript of our conversation.

Nancy Marshall Genzer: Here’s one, Molly, and let’s see if you can figure out what this law would do. It’s called “Keep Big Tech out of Finance,” and it would prohibit large platforms like Facebook from becoming chartered, licensed or registered as a U.S. financial institution. There’s another bill called the “Stablecoins Are Securities Act” of 2019. This bill says that Stablecoins, which are [digital] coins, like Libra, pegged to a basket of something that is considered stable, so these coins are not supposed to fluctuate. So securities being stocks and bonds, this bill says, “Hey, Libra, all the laws that apply to stocks and bonds are going to apply to you.”

Molly Wood: Just to clarify, that would put the SEC in charge of regulating something like Libra and take it away from being a purely financial product?

Marshall Genzer: Sure would. The SEC, and possibly other government regulators. And of course the Fed has already said, “Hey, we’re going to be regulating you, Libra.” The last one says the issuers of Stablecoins would not be able to raise money on U.S. capital markets if they were paid with Stablecoin, or if they worked with someone who is affiliated with Stablecoin. That would also be a blow to Facebook; it wouldn’t be able to raise money in U.S. capital markets.

Zuckerberg testified about Facebook’s proposed cryptocurrency Libra, how his company will handle false and misleading information by political leaders during the 2020 campaign and how it handles its users’ data and privacy. (Chip Somodevilla/Getty Images)

Wood: Broadly around these regulatory efforts and others, just returning to the idea of keeping big tech out of finance, that ship has sailed it seems. We’re really seeing big tech companies already attempting to become financial institutions, and digital currencies are just part of that. I wonder how you see regulation in 2020 scrambling to catch up with tech’s ambitions around finance and banking and payments and cryptocurrencies?

Marshall Genzer: I think you’re absolutely right. The horse has already left that barn, and I think that Libra is such a bold step, that that’s where they’re planting their flag and saying, “Look, you really have to slow down here, Facebook.”

Wood: There are three bills on the table, maybe more coming. Do you think any of those existing measures are likely to pass?

Marshall Genzer: They’ll probably pass the House. The big question is whether they would pass the Senate, because the House is controlled by Democrats, who tend to be a little bit more leery of these things. The Senate, a little more industry-friendly, is controlled by Republicans. Right now, there are no co-sponsors in the Senate for any of those house bills that I just listed.

Wood: One argument that Mark Zuckerberg has made, too, and I wonder what you think about this, he’s fond of saying things like: “If we don’t do some version of Libra, China will.” Do you have the sense that that’s an argument that’s working on the Senate?

Marshall Genzer: It could be. Both Republicans and Democrats are wanting to regulate Facebook a little bit more, but I think, generally, Democrats are more pro-regulation than Republicans. I think it would be more a matter of Republicans shying away from regulation.

The team

Molly Wood Host
Jody Becker Interim Senior Producer
Stephanie Hughes Producer

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