Under a new U.S. bill, Facebook’s Libra would be viewed as a security and would be within the jurisdiction of the Securities and Exchange Commission (SEC).
Congress Representatives were unhappy with Zuckerberg‘s attitude on his last hearing within a building of the House Financial Committee Services. Previously, Mark claimed that his company would not be trying to undermine the existing dollar-based economy. Yet, he wants Facebook to have its branded currency no matter what, working all over the Earth, with 200 million people as the “ready to go” audience. And even if the EU, Asia-Pacific and other tech-savvy gigs start developing much better, cleaner competitors, Facebook acts like it won’t stop no matter what.
CNBC reported that the U.S. officials Lance Gooden and Sylvia Garcia drafted a new bill allowing cryptocurrencies like Libra to establish itself as a security, not a cryptocurrency or other type of the new virtual stocks. As a result, Libra may be found under the jurisdiction of the Securities and Exchange Commission (SEC).
“This legislation clarifies the statute to remove any ambiguity. Bringing clarity to the regulatory structure of these digital assets protects consumers and ensures proper government oversight going forward,” noted Congresswoman Sylvia Garcia.
The Libra stablecoin will have to comply with many rules that usually contradict the main principles of the cryptocurrencies. However, Facebook is receiving a huge amount of criticism for their previous deeds, and Libra is not considered as a cryptocurrency by many of the harsh market analysts.
Facebook already claimed that their coin is not a security, but a commodity. Yet, it didn’t work. During the hearings in July 2019, the head of the Libra project said that it’s not a token or a simple exchange asset; it is something much bigger.
Lance Gooden is sure that the new law will protect customers in the U.S. from any kind of much bigger assets. There are not so many public persons in crypto space saying that a “Zuck Buck” is the road to financial future. He thinks that the Congress must take action and develop viable rules for so-called “managed stablecoins”.
The Trick is Hidden in the Word ‘Managed’
The big problem with coins like Bitcoin or Monero is that they are not controlled (as the developers say) by any specific company, a venture fund, or a government. Thus, if the regulator wants to halt the development, bring people to court or make them pay taxes, they need the virtual currency to be centralized. Otherwise, they just get nothing. This is the only way the government can be sure that you use cryptocurrency or stablecoin without breaking the laws.
Most of the coins are already centralized around 2-3 active developers. Even Monero! And now, the new term “Managed Stablecoins” arise, showing the people with big pockets a road to the industry’s management. Managed here means centralized, so this way we tend to come back to the old system using new tech and complicated blockchain-related lingo. All just to continue “printing money out of thin air”, where a mature and tiered asset relocation social program is a sad fairytale, not a possible reality.
A managed virtual asset is something very easy to control, because you can blackmail the manager, for instance. When you have a public person with a long history in business administration ruling the money transmitting business, be sure that this person is a perfect candidate.
When you put most of the talented people under the special service agent’s control, the hope for freedom is lost. No one will be able to gain independence from the state as all the “revolution leaders” are compromised.
Crypto Community Fear #1: U.S. Government Will Come to Check ‘How Y’all Doing’
Current U.S. law does not recognize stablecoins as something that has market worth or strict official status. But the situation is changing every day thanks to the efforts of institutional investors, crypto companies, and people who use cryptocurrencies to buy goods and services. Even the bandits who use it to break the law made significant efforts to attract the attention of regulators across the planet.
Nasty people have been using the cryptocurrency space for many years to facilitate hidden activities of different kinds, from selling fake tobacco on Darknet to ordering a hitman to finish your ex and pay with Bitcoin for it. Bitcoin has allowed too much freedom, it looks like its time to “regulate” it softly.
The situation has led to many world’s Central Banks issuing warning notes and open letters saying that the users should make due diligence before investing in anonymous virtual money (which is, as they often say, against any morale by default).
When it comes to regulating stablecoins, nothing is more important than understanding what exactly a stablecoin is. It depends on the developers’ bio and their code, the official stance of the government, and the algorithms that blockchain use to confirm transactions. Putting Libra into the securities category will allow the state to eliminate the dangers posed by stablecoins usage and strengthen the dollar’s power one more time in history. Next target? There are too many stablecoins on the market now, providing a low level of anonymity and a very high level of liquidity. Pick any, and you won’t be wrong saying that it will be managed somehow after 5 or 10 years no matter what the core developers have said at the beginning of the journey. Per Rep. Gooden:
“In what are called ‘managed stablecoins’, we have trusted brands marketing digital assets to consumers as secure and stable”
Whether anything is “secure and stable” or not, you will have to find out by yourself: sometimes at the cost of your own money or freedom, sometimes just for fun.