US lawmakers have introduced legislation that would classify Facebook’s upcoming cryptocurrency Libra as a security – subjecting it to more stringent regulation.
Libra is a blockchain-based digital currency planned to be launched in 2020. Facebook aims to let its nearly two billion users pay and send digital cash using Libra via the Calibra digital wallet.
While the social media giant says Libra will be a payments system similar to PayPal, politicians from both US parties want it to be recognised as an asset.
Two members of the House Financial Services Committee – Sylvia Garcia, a Democrat, and Lance Gooden, a Republican – proposed the ‘Managed Stablecoins are Securities Act of 2019’.
Garcia said Libra and other managed stablecoins “are clearly securities under existing law”.
Facebook CEO Mark Zuckerberg has faced pressure from US lawmakers over Libra
In a statement, Garcia wrote: “Bringing clarity to the regulatory structure of these digital assets protects consumers and ensures proper government oversight going forward.”
Gooden added: “In what are called ‘managed stablecoins’, we have trusted brands marketing digital assets to consumers as secure and stable.
“Everyday investors need to know they can trust the issuers behind their financial assets. 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.”
When contacted for a comment by CNBC, Facebook and the Libra Association, a group that will oversee the cryptocurrency, did not respond.
Earlier this month, the head of Libra cryptocurrency wallet Calibra said Bitcoin is more of an asset, like gold, than a true currency.
David Marcus said: “I don’t think of Bitcoin as a currency. It is actually not a great medium of exchange because of its volatility. I see it as digital gold.”
He added that Bitcoin’s volatility is why consumers do not use it to make purchases.
Despite his comments, Bitcoin’s viability as an online payment method appears to be growing.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.