Proposed bill could kill new financial services from tech giants

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Apple Card
More tech companies have been racing to launch financial services.
Photo: Apple

Tech companies are getting into the finance game, and not everyone’s happy about it.

That’s why a new draft bill is raising the possibility of banning tech companies from acting as financial institutions or issuing their own digital currencies.

The draft bill has been circulated for discussion by the Democratic majority that leads the House Financial Services Committee.

Right now, the bill is at its early stages. It will likely run into a number of challenges, both from tech lobbyists groups and Republican members of the house. To be signed into law it will need to pass both the house and the senate.

The draft legislation is titled “Keep Big Tech Out Of Finance Act.” If passed, it would affect companies offering an online platform service bringing in at least $25 billion in annual revenue. Companies which ran afoul of the law would have to pay $1 million in fines per day.

“A large platform utility may not establish, maintain, or operate a digital asset that is intended to be widely used as medium of exchange, unit of account, store of value, or any other similar function, as defined by the Board of Governors of the Federal Reserve System,” the bill proposes.

Will it affect Apple?

Should this bill pass, the big question is whether it would affect Apple. It seems to mainly be a response to Facebook’s proposed Libra digital coin initiative. Facebook’s new currency is proposed to launch in 2020.

Apple, for its part, has not considered launching its own currency. However, it has certainly taken steps to move into FinTech areas. This is most notable with the launch of Apple Pay and, more recently, Apple Card.

While this is certainly big business, though, Apple remains predominantly a hardware company in terms of its revenue. Still, it will be interesting to see where this goes next.

Source: Reuters