Facebook’s Libra, along with many other stablecoins, could be classified as securities and subject to increased regulatory scrutiny if a group of lawmakers get their way.
Two members of the House Financial Services Committee, U.S. Reps. Sylvia Garcia (D-Texas) and Lance Gooden (R-Texas), on Thursday introduced new legislation called the “Managed Stablecoins are Securities Act of 2019.” The goal of the bill, according to the press release, is to “protect consumers against certain cryptocurrencies, such as Facebook Libra Project.”
“Everyday investors need to know they can trust the issuers behind their financial assets,” Gooden said in a statement. “This bill would bring them the security they deserve by applying the laws we use to regulate financial securities to this new breed of digital currencies.”
Facebook has consistently pushed back on the classification of Libra as a security. David Marcus, the social media giant’s crypto chief, said during a congressional hearing in July that rather than a security or exchange-traded fund (ETF), Libra should be considered a commodity akin to the digital payment system PayPal.
Libra is “clearly” a security under existing law, Gracia said in a statement. Garcia and Gooden were among the lawmakers calling for Facebook CEO Mark Zuckerberg’s testimony before their committee in October. Their collaboration on this bill marks another bipartisan effort to put regulatory constraints on Facebook’s proposed stablecoin.
Other companies also struggle to bend the status of their cryptocurrencies to their favor. Messaging service Telegram, for instance, claimed that its cryptocurrency, Gram, is not a security after the U.S. Securities and Exchange Commission (SEC) decided otherwise and declared that the sale of its $1.7 billion worth of Gram tokens was illegal. Regulators have since dismissed Telegram’s counterclaim.