Here’s one of the paragraphs from the ‘Keep Big Tech Out Of Finance’ draft bill that’s been doing the rounds online over the last few days:
‘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.’
It then goes on to define ‘large platform utility:
‘The term ‘‘large platform utility’’ means a technology company–
- with an annual global revenue of $25,000,000,000 or more; and
- that is predominately engaged in the business of offering to the public an online marketplace, an exchange, or a platform for connecting third parties’
It’s pretty clear which companies that’s aimed at. Google, Facebook, Apple, Netflix even. But it also applies to others that you may not have thought of yet that could lead to some interesting repercussions.
Can the US really stop Big Tech?
Clearly the US doesn’t want ‘Big Tech’ near their precious financial system. But the question is: Can they stop them?
As you know, Facebook has been copping a pasting by US authorities this week over their Libra project. After all, we’re talking about a consortium of up to 100 massive corporations pooling resources to build a financial reserve.
That reserve will then be used to underpin a cryptocurrency that’ll be used across their global networks, spanning billions of people to bring financial services to the masses.
That’s everything that the US doesn’t want to happen. It’s also the single biggest redistribution of global financial power we’ve ever seen…if it actually goes ahead.
On Tuesday, Head of Libra, David Marcus made some interesting opening statements addressing his Senate hearing. He said:
‘We are only at the beginning of this journey.
‘We will take the time to get this right. We expect the review of Libra to be the most extensive ever, we are committed to working with regulators in the US and around the world.’
And when talking about how Libra is supposed to work, he stated:
‘Imagine a daughter who wants to send money home to her mom in another country. Of the $200 she sends on average $14 will be lost in fees. It can also take several days or a week for the mother to receive the money.
‘[We are] developing a Safe, secure and low cost way for people to efficiently move money around the world.’
But his last comment before questions was a kick to the teeth of Washington:
‘If America doesn’t lead innovation in digital currency and payments area, others will. If our country fails to act we could soon see a digital currency controlled by others whose values are dramatically different from ours. I believe that Libra can drive positive change for many people and can provide an opportunity for leadership consistent with our shared values.’
What he alludes to there are the ‘frenemies’ of the US making active moves into digital currencies and digital assets…cryptocurrency.
We’re not of the view that US regulators are going to stamp out Facebook’s lofty goals with Libra outright. But it will likely be an overly regulated shadow of the originally intended ideal.
Libra has every chance of being more PayPal than bitcoin when this plays out in the wash. But we do believe it’s going to end up as another portal through to the world of cryptocurrency.
This direction is likely because the US regulators can and will regulate companies like Facebook. But they can’t and won’t regulate truly decentralised networks like bitcoin, simply because they can’t.
And while Facebook might be the first to kick down the door to Wall St and their protected power base, Facebook won’t be the last. In fact, we still believe that the combined network value of Big Tech is so powerful that it will become more influential in the proliferation of decentralised networks.
Where you should invest
Big Tech isn’t opposed to the concepts of decentralised finance. There’s a reason why Jack Dorsey and his companies are moving into this space. There’s a reason why Facebook is trying to launch Libra. There’s a reason why Microsoft researchers are constantly looking at ways to integrate and work with blockchain networks like Tezos, Chainlink and others.
Cryptocurrency and decentralised, distributed blockchain networks will be a core foundation of our world in the next 100 years. It will be the foundation of the New Empire. And it’s these networks that new commerce, industry, finance and social networks, will be built on.
That doesn’t mean that everything is going to be built around a cryptocurrency. We already know that we’ll find companies like Coinbase or Chainalysis with billion dollar valuations. These are crypto projects, they’re companies working in the new decentralised networks and blockchain industry.
There will be new companies, like Security Matters Ltd [ASX:SMX] or Yojee Ltd [ASX:YOJ] or Animoca Brands Corp Ltd [ASX:AB1], all ASX listed companies involved in the use of blockchain and decentralised networks. Whether it’s authentication, logistics or gaming, there are immeasurable opportunities for a world in which the New Empire is built by the corporations, but the power exists with the end user…you.
That’s really what the New Empire will end up looking like. The War for Power is fought and won in the end by the individual. Decentralised networks and the technology revolution they bring will put that power back in your hands.
You will have more control and influence over your world, your connections and your finances than ever before. There will be investing opportunities in traditional assets and newer, more ‘alternative’ asset classes.
But the good news is there will be, and already are, I believe, opportunities everywhere to park some money for the long term as the New Empire takes control and the American Empire crumbles.
Editor, Money Morning
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