Steven Mnuchin says cryptocurrencies might pave the way for national security issues

Steven Mnuchin, the U.S. Secretary of the Treasury held an official briefing regarding regulations on cryptocurrencies and security issues associated with digital assets like bitcoin and Libra.

Backing Trump’s recent set of tweets on cryptocurrencies, Mnuchin pointed out the security issues affiliated with bitcoin and other cryptocurrencies, citing that the use of these digital currencies to support illicit activities is a “national security issue.” He said,

“Cryptocurrencies such as bitcoin have been exploited to support billions of dollars of illicit activity like cybercrime, tax evasion, extortion, ransomware, illicit drugs, and human trafficking. Many players have attempted to use cryptocurrencies to fund their malignant behavior. This is indeed a national security issue.”

Mnuchin suggested that the Financial Stability Oversight Council’s Working Group on Digital Assets has been established to collaborate with financial authorities like SEC, CFTC, and FinCEN to restrain the hazards of cryptocurrency. He asserted that the government would not support or tolerate the use of cryptocurrencies for illicit activities. He also added that the government wouldn’t allow digital asset service providers to operate in the shadows.”

He further said,

“Treasury has been very clear to Facebook, to bitcoin users and other providers of digital financial services that they must implement the same anti-money laundering and countering financing of terrorism, known AMLCFT safeguards as traditional financial institutions.”

Mnuchin also added that the government would upgrade its efforts to regulate cryptocurrencies and all kinds of cryptocurrencies would be entailed to similar levels of regulation, oversight, and expectations as traditional financial institutions. He said,

“The rules governing money service providers apply to physical and electronic transactions alike. As money service businesses, cryptocurrency money transmitters are subject to compliance examinations, just like every other U.S. bank. To be clear, FINCEN will hold any entity that transacts in bitcoin, Libra, or any other cryptocurrency to its highest standards.”

Mnuchin also commented on Facebook’s new cryptocurrency Libra suggesting that Facebook still has to do a lot of work to convince the lawmakers, irrespective of the various meetings that have been held so far with regulators and representatives. He said,

 “There are these discussions going on and they will continue to go on. To the extent that Facebook can do this correctly and can have a payment system with proper AML, that’s fine, but they have a lot of work to do to convince us.”

The crypto community reacted to Mnuchin’s briefing positively. CEO of Digital Currency Group, Barry Silbert said that the recent briefing was a “complete and total validation of bitcoin.” He further added,

“Never imagined I’d be watching the Treasury Secretary of the United States hold a press briefing from the White House re bitcoin and cryptocurrencies so soon.”