If a new bipartisan bill goes through, the Facebook Libra coin and many other stablecoins could be considered securities. This would subject such coins to increased scrutiny from the SEC. Two members of the US Congress from opposite sides of the divide introduced a new bill dubbed “Managed Stablecoins are Securities Act of 2019.” This bill aims to protect the public from cryptocurrencies such as the Libra project, according to a press release.
In the statement, the two members said that it was important for investors to be assured of the safety of their investment. They claim that the bill will offer investors the security they deserve by using the same laws that regulate securities to stable coins.
In the past, Facebook has pushed back against claims that Libra is a security. During the congressional hearing in June, the company point man in the Libra project said that Facebook Libra was a commodity. He compared it to the PayPal system and denied that it was an exchange-traded fund or a security.
However, the two members of congress are not convinced. Garcia, who is one of the lawmakers that introduced the bill, claims that Libra meets the criteria for a security. Both of the lawmakers were amongst those calling for Zuckerberg to testify before Congress in October on the Libra project. This bill is yet another bipartisan effort to stop the Facebook Libra project through regulation.
Various other firms have been trying to avoid their digital currencies classified as securities. One of the most prominent is Telegram, which recently halted the sale of Gram token due to regulatory action. The social media giant claimed that the Gram token was not a security. However, the SEC was not convinced and it declared the planned sale of $1.7 billion worth of Gram tokens illegal. The SEC has since then filed court documents dismissing the counterclaim made by Telegram.
Facebook has been lobbying hard to get regulators to see their side of the story. It remains to be seen if their lobbying efforts have paid off. If this bill passes, it could mean the end of the Facebook Libra project.