What Libra pushback means for startups. Congressional leaders in the House and Senate are planning to hold hearings this week about Facebook's recently launched Libra cryptocurrency. The hearings, as well as recent legislative and administrative responses to the digital currency proposal, could potentially impact blockchain and cryptocurrency startups.
Lawmakers on the Senate Banking Committee are holding a hearing this morning at 10 a.m. to examine "Facebook’s proposed digital currency and data privacy concerns." Testimony from David Marcus, the head of Facebook's digital currency project, has been posted on the Senate panel's site. The House Financial Services Committee has scheduled a similar hearing tomorrow, July 17, to examine how Facebook's proposed cryptocurrency would impact "consumers, investors, and the American financial system."
The debate over Facebook's proposed digital currency could impact similarly-focused startups. Democrats on the House Financial Services Committee have already circulated a draft bill that would prohibit large tech companies from acting as financial institutions or issuing cryptocurrencies. While the bill would only apply to companies with $25 billion or more in revenue, it shows lawmakers' growing interest in cracking down on tech platforms that allow users to send money or utilize other digital payment products.
Trump administration officials have also expressed unease about Facebook's proposed cryptocurrency, and there is some concern that worries about Libra's financial impact could spread to other startup companies operating in blockchain, crypto, or payment-oriented sectors. Treasury Secretary Steven Mnuchin yesterday called Facebook’s Libra currency “a national security issue” and added that the department “will not allow digital asset service providers to operate in the shadows.” Mnuchin’s comments came after Federal Reserve Chairman Jerome Powell told the House Financial Services panel last week that Libra raises concerns “around privacy, money laundering, consumer protection, [and] financial stability.”
On the Horizon.
The House Judiciary antitrust subcommittee is holding a hearing at 2 p.m. this afternoon with representatives from Apple, Amazon, Facebook, and Google as part of the panel’s ongoing antitrust probe of tech giants.
The Senate Judiciary subcommittee on the Constitution is also holding hold a hearing at 2:30 p.m. this afternoon to discuss allegations that search engines censor conservative voices.
The Senate Judiciary Committee is slated to vote on the CASE Act, legislation that would change U.S. copyright enforcement, this Thursday, July 18. We published a blog post last week explaining how the CASE Act could harm startups and their users.