Treasury Secretary Steven Mnuchin said the Trump administration has “very serious concerns” about Facebook Inc.’s proposed cryptocurrency Libra, which has already drawn the ire of President Donald Trump and Democratic lawmakers.
“This is indeed a national security issue,” Mnuchin said in a briefing for reporters at the White House. “We will not allow digital asset service providers to operate in the shadows.”
Mnuchin said that Treasury’s Financial Crimes Enforcement Network “will hold any entity that transacts in Bitcoin, Libra or any other cryptocurrency to its highest standards.” He broadly criticized cryptocurrencies, echoing the president, who said in a series of tweets last week that they are “not money.”
“Bitcoin is highly volatile and based on thin air,” Mnuchin said. “We are concerned about the speculative nature of bitcoin and will make sure that the U.S. financial system is protected from fraud.”
Mnuchin said he would address the issue with the finance ministers from other major global economies at a Group of Seven summit in France this week. He’s also discussed the issue “extensively” with Federal Reserve Chairman Jerome Powell, he said.
“With respect to Facebook’s Libra and other developments in cryptocurrencies, our overriding goal is to maintain the integrity of our financial system and protect it from abuse,” Mnuchin said.
Mnuchin said Facebook’s planned digital currency “could be misused by money launderers and terrorist financiers” and that it was a “national security issue.”
“Cryptocurrencies such as bitcoin have been exploited to support billions of dollars of illicit activity like cyber crime, tax evasion, extortion, ransomware, illicit drugs and human trafficking,” Mnuchin said, adding that he is “not comfortable today” with Facebook’s launch.
“They have a lot of work to do,” he said.
Mnuchin’s comments come one day before Facebook’s David Marcus, the top company executive working on the project, appears before the Senate Banking Committee. In his prepared testimony, Marcus sought to mitigate concerns that the company’s proposed coin will be a threat to national currencies.
Marcus said the token won’t launch until regulatory questions are fully addressed and he added that Facebook will get “appropriate approvals.” He said the coin isn’t isn’t intended to compete with countries’ sovereign currencies and won’t interfere with central banks on monetary policy,
“The time between now and launch is designed to be an open process and subject to regulatory oversight and review,” Marcus wrote. “We know we need to take the time to get this right. And I want to be clear: Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals.”
Trump said four days ago that companies issuing cryptocurrency, including Facebook, should be subject to banking regulations.
"I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity..." Trump tweeted.
"....Similarly, Facebook Libra’s “virtual currency” will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National..."
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