Libra in the United States
The U.S. Representative for Texas’s 29th congressional district, Sylvia Garcia, introduced a draft bill to the House Financial Services Committee on Oct. 18. The draft bill, called the ‘‘Stablecoins are Securities Act of 2019,” seeks to regulate stablecoins under the Securities Act of 1933. This entails “amending statutory definitions of the term security” to include the term “managed stablecoins.”
The proposed bill seems to be directed at Facebook’s Libra stablecoin, which is planned to launch in 2020. Lawmakers across the globe weigh in on the discussion in regards to stablecoins, such as Libra, and its perceived threat to the global financial system.
Libra around the world
Similarly, the global monetary watchdog, the Financial Action Task Force (FATF), voiced its concerns over Facebook’s Libra and other stablecoins, claiming that mass adoption of such currencies could hinder efforts to detect and stamp out money laundering and terrorist financing.
Regulating Libra as a security
Oct. 18, U.S. Representative Warren Davidson, known for his role in authoring the Token Taxonomy Act, said that Libra is ultimately classified as a security and therefore falls under the purview of the SEC.
Echoing today’s draft bill’s concern with a stablecoin being managed by a company, Davidson said, “It has nothing to do with stablecoins. It has to do with whether there’s a central authority that can alter it.” He added:
“It’s the ability to destroy your value […] And in that sense, when you’re placing all your faith in the value of that token on the actions of a central authority, that’s where I tend to agree with Jay Clayton. That looks a lot like a security.”