1933 Securities Act is Archaic, Says US Senator Rounds in Support for Facebook’s Libra
While multiple members pulled out of Libra Association after the US Senate threatened the companies and CEOs to drop their support to Libra or face a heightened level of scrutiny, one US Senator has come in support of Facebook's cryptocurrency project.
Sen. Mike Rounds (R-S.D.) wrote a letter to Libra Association member Anchorage, a South Dakota-based digital asset custodian opposing the letter sent by his Congressional colleagues US Senator Brian Schatz (D-HI) and US Senator Sherrod Brown (D-OH), stating that the push back is not healthy for the innovation.
“It is profoundly disappointing that my colleagues chose to address your peers in such an ominous tone, which I fear may put a chill on innovation in the long run,” Rounds said.
Libra has the potential to help unbanked in the US
Rounds urges Anchorage to “persevere” its role in the Libra Association while endorsing the project saying it’s a technological advancement that could help US consumers.
“Technologies like Libra … have the potential to help unbanked and underbanked consumers right here at home,” he wrote Wednesday adding,
“It would be unfortunate to shun a new solution that could connect more of the most vulnerable Americans to our financial services system.”
He further expressed his concern that the US is falling behind in the digital space. Rounds pointed out how the rate of digital wallets use in the US, projected to be 10% in 2022, is much lower than in Africa, where there were already over 100 million active accounts in 2017. China meanwhile dwarfs the US in innovation in payments technology.
The US needs to retain its pioneering edge in the digital space
With the payments industry is still in “infancy” in the country, this negative reaction to Rounds is “puzzling,” further due to the antiquity of legal framework.
The Securities Act of 1933, he argues was written half a century before computers and the Internet were created and a period when 90% of rural America lacked electricity. Currently, there is no clear legal way to ascertain whether a digital asset is a security.
As such, a number of companies are finding it easier to operate overseas. Congress and regulators should make it easier for crypto companies to work in the US to “retain its pioneering edge in the digital space,” he said.
Shame to Lose the Progress Libra has made
Rounds himself share the concerns about the dangers posed by digital currencies in terms of money laundering, criminal activity, and terrorism financing. However, these concerns could be tackled through existing legislative proposals.
“The demands of a few of my colleagues should not be viewed as defining federal policy when it comes to innovation in digital currencies,” he added.
Rounds praised the “entrepreneurial spirit” and the “deliberate approach” taken by the Libra Association, citing its dialogues with the Congress and regulators as examples. He said:
“While the Association is still in the process of standing up its governance framework and its operating rules, it would be a shame to lose the progress you have already made in creating Libra.”