Technology

What Is The Keep Big Tech Out Of Finance Act? – Commentary

Jay Arcata, a lawyer by education and the vice president of client operations at BX3 Capital, a business advisory firm that helps companies get situated with fundraising and professional services, has a few insights regarding the Keep Big Tech Out of Finance Act, a draft bill in the House of Representative that would forbid online platforms with annual revenue of at least $25 billion from either becoming or affiliating with financial institutions, as well as preventing them from issuing their own cryptocurrencies.

Keep Big Tech Out Of Finance Act
Simon / Pixabay

Effectively, this bill is a reaction to Facebook’s proposed Libra cryptocurrency and is garnering attention accordingly. But what is actually in this bill? Some of Jay’s thoughts:

Get The Full Ray Dalio Series in PDF

Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q2 hedge fund letters, conference, scoops etc

  • Important to note that the Big Tech Out Of Finance Act is a “discussion draft” at this point.  Not a full-fledged bill
  • Seems to have been hastily assembled and is clearly a knee-jerk reaction to Libra.  While we know that Libra is the intended target, as drafted, the bill is more far reaching and could have impact on blockchain adoption more generally
  • Bill actually seeks to do more than keep big tech out of crypto – title suggests that intent is to keep big tech out of finance altogether.
  • As drafted, would ban any tech company of a certain size from creating, operating or managing a “digital asset”. Term “digital asset” is undefined at the outset of bill— will rely on the Board of Governors of the Federal Reserve System to define – but then is defined as “means an asset that is issued and transferred using distributed ledger or blockchain technology, including, so-called ‘‘virtual currencies’’, ‘‘coins’’, and ‘‘tokens
  • Text of Big Tech Out Of Finance Act reveals a lack of appreciation/understanding of what a digital asset actually is.  It can be argued that the USD is effectively a “digital asset,” so “digital assets” are neither new nor a threat to our monetary system.
    • There is a big difference between “cryptocurrency” and “digital asset.”
      • Cryptocurrency is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.
      • A digital asset is any text or media that is formatted into a binary source and includes the right to use it. Digital files that do not include this right are not considered digital assets. Digital assets could be anything from motion pictures to documents.