U.S. Treasury Secretary Steven Mnuchin agrees with his boss that crypto is for crooks.
In a press conference Monday, Mnuchin voiced the Trump administration’s concerns with Facebook’s Libra and cryptocurrencies like bitcoin. Mnuchin’s statements come ahead of two hearings on Capitol Hill this week, in which Facebook blockchain lead David Marcus is expected to testify before both Senate and House lawmakers.
The press conference also follows a series of tweets from President Donald J. Trump last week regarding cryptocurrencies and Libra. At the time, Trump said cryptocurrencies are used in “unlawful” activities such as drug trafficking. In a subsequent tweet, Trump said Facebook might have to acquire a banking charter to conduct business with Libra.
While Mnuchin did not make any new policy statements Monday, he did reiterate statements made by various government entities in the past, describing the potential for cryptocurrencies to be used by criminals as one main issue.
“Libra could be misused by money launderers and terrorist financiers,” Mnuchin said, using money laundering, terrorist financing, extortion, human trafficking, drug trafficking and tax evasion as examples of crimes that could be facilitated by cryptocurrencies and Libra. He added:
“This is indeed a national security issue.”
The Financial Crimes Enforcement Network (FinCEN) will be examining Libra and bitcoin, and will hold any entity that transacts with either “to the highest standards,” Mnuchin said.
Mnuchin also referenced the Financial Action Task Force (FATF), which published guidance for its member governments on how to regulate cryptocurrency service providers last month. In particular, the FATF guidance recommends enforcing the so-called “travel rule,” which requires exchanges and wallet providers to hold know-your-customer information on both sides of each transaction.
After the speech, Coin Center director of research Peter Van Valkenburgh highlighted that the Treasury Department, which Mnuchin oversees, has offered guidance for how crypto custodians can comply with the Bank Secrecy Act and how it has tried to “export” its policies through the FATF.
Treasury Secretary's speech focused on two things that they've already done to deal with Bitcoin: (1) offer clear guidance about how custodians must comply with BSA as money transmitters and (2) export those policies abroad through the FATF.
— Peter Van Valkenburgh (@valkenburgh) July 15, 2019
“We’re going to great lengths to ensure that effective regulation does not stop at our borders,” Mnuchin said.
Look at Libra
Mnuchin referred to Libra, which Facebook first announced last month, a number of times in the half-hour press conference. Representatives from the social media giant have met with Treasury officials, as well as other government agencies, he said.
So long as Facebook can maintain strict anti-money-laundering standards, there should be no problem with it launching Libra, but Mnuchin said multiple times that the company has much work to do before he will be convinced of its compliance.
Mnuchin said he is “not comfortable” with Libra launching at this time.
“With regard to Facebook’s Libra, our overriding goal is to maintain the integrity of our financial system and protect it from abuse,” Mnuchin said.
In response to a question on bitcoin and other cryptocurrencies more broadly, Mnuchin said he did not know and would not speculate on how or why bitcoin’s price might be trading at its current levels.
“We’ll make sure the general public and investors understand what they’re investing in and whether it’s the SEC or other regulators there [will be] proper disclosures.”
Bitcoin’s price climbed more than 4 percent in the 45 minutes since the conference began
Steven Mnuchin image via YouTube