What are the two crypto laws being proposed by the US Congress?

The US lawmakers are drafting bills to provide clarity around stablecoins and offer regulations for tech firms like Facebook that are planning to start their own cryptocurrencies. The draft legislation “Keep Big Tech Out Of Finance Act” was proposed on July 15, 2019, by the Democratic majority of the House Financial Services Committee. The proposal is aimed at preventing major tech companies from operating like financial institutions, though the legislation is specifically targeted at Libra, Facebook’s upcoming crypto.

As per a copy of the draft legislation, a big tech firm is described as a firm offering an online platform service with at least $25 billion in annual revenue. The bill reads:

A large platform utility may not establish, maintain, or operate a digital asset that is intended to be widely used as medium of exchange, unit of account, store of value, or any other similar function, as defined by the Board of Governors of the Federal Reserve System.

According to a press release on November 15, Facebook is still planning to launch Libra and develop the stablecoin’s network. It’s also planning on introducing an array of features in the next few months. Regulators and industry experts are expressing concern over Libra though Facebook has not set any release date for the launch of the cryptocurrency. 

Chairwoman Maxine Waters expressed her concerns about Libra as a follow up to the Keep Big Tech Out Of Finance legislation. In an open statement, she said:

In light of these and other concerns, my colleagues and I wrote to Facebook earlier this month to call on it to cease implementation of its plans until regulators and Congress can examine the issues associated with a large technology company developing a digital currency, and take action. The Independent Community Bankers of America and others support this commonsense step.

The Keep Big Tech Out Of Finance proposal would allow the federal government’s financial regulators to charge fines up to $1 million per day for violations. Due to the penalty that is charged if rules are not followed, big tech firms will be careful before launching their own currencies or performing banking operations. 

The US Congress published a draft bill titled “Stablecoins Are Securities Act” in October 2019. This regulation is expected to regulate stablecoins under the familiar Securities Act of 1933. 

The bill reads:

Because issuers of managed stablecoins nevertheless maintain that managed stablecoins are not securities, it is appropriate for Congress to provide clarity by amending statutory definitions of the term security to include managed stablecoins.

If the “Stablecoins Are Securities Act” bill passes, all the laws that are applicable to stocks and bonds will apply to stablecoins like Libra. Nancy Marshall-Genzer, Marketplace policy reporter, explained:

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.