Dems offer bill on Libra oversight

A pair of lawmakers on Thursday introduced legislation that would place stringent government oversight on Facebook’s incoming digital currency and similar projects.

The bill from Reps. Sylvia Garcia (D-Texas) and Lance Gooden (R-Texas) would place the Libra digital coin squarely under the Securities and Exchange Commission’s jurisdiction, a move that would subject the cryptocurrency to a set of extensive and well-established regulations.

Facebook has denied that the Libra coin is a security. But lawmakers have struggled to understand how to classify the ambitious Libra project because the U.S. government has not yet defined which federal agencies will be in charge of regulating cryptocurrencies.

“Managed stablecoins, such as the proposed Libra, are clearly securities under existing law,” Garcia said in a statement. “This legislation simply clarifies the statute to remove any ambiguity. Bringing clarity to the regulatory structure of these digital assets protects consumers and ensures proper government oversight going forward.”

Gooden said it is Congress’s role to “clarify the regulatory framework” for digital currencies like Libra, which will likely be pegged to government-backed currencies like the dollar. The Libra coin has been classified as a “stablecoin,” meaning it is backed by a basket of currencies held in a reserve.

“It’s the responsibility of Congress to clarify the regulatory framework that will apply to stablecoins, especially now that mainstream institutions are offering them to consumers,” Gooden said.

David Marcus, who heads Facebook’s involvement in the project, told reporters earlier this year that it strongly opposes defining the Libra as a security.

“We strongly believe it’s [not a security] and we have good legal opinion that confirms in the view of the outside counsels we’ve … consulted,” Marcus said.