Regulation

U.S. Treasury Secretary says bad actors utilizing crypto is “national security issue”

Quick Take

  • U.S. Treasury Secretary Mnuchin held a press conference on crypto
  • Mnuchin focused on the importance of rooting out bad actors in crypto
  • He also touched on Facebook’s Libra and the high standards the crypto will have to comply with

The U.S. Department of the Treasury Secretary Steven Mnuchin called concerns surrounding crypto a “national security issue” in a news briefing on cryptocurrencies today, stressing that the administration’s “number one issue” is keeping bad actors from utilizing crypto for nefarious activity. 

“We will not allow digital asset service providers to operate in the shadows,” said Mnuchin.

He pointed out that the cryptocurrency market is still prone to the exploitation of bad actors for money laundering, privacy invasion and frauds. Mnuchin said the speculative nature of bitcoin makes it challenging to protect U.S. investors from frauds, and called for more caution when making regulatory decisions on cryptocurrency projects, one of which is Facebook’s Libra project. 

Mnuchin said that the tech giant’s cryptocurrency plan has triggered the Treasury Department to express “very serious concerns.” The department has had multiple meetings with regulators FSAC and Facebook “To the extent that Facebook can do this correctly…they’ve got a lot of work to do to get it to that place.”

Mnuchin’s public comments on cryptocurrencies echo lawmakers’ increasing attention on the rising asset class. The House and Senate both have Libra hearings scheduled for this week. Members of Congress have called for a moratorium on Libra development until relevant questions can be answered. 

Last week, United States President Donald J. Trump expressed his view on cryptocurrencies and blockchain, saying that he is “not a fan of cryptocurrencies,” and that they are “not money.” 

However, while lawmakers have approached crypto with caution, some also say crypto is the future of finance. Representative Darren Soto, co-head of the blockchain caucus told The Block that the U.S. needs to embrace crypto, and it’s part of the future.

“Right now the dollar is the main economic foundation of the world economy,” he said. “Soon we could see cryptocurrency forming a greater share of that.”

Soto said progress like that in the crypto space can’t be stopped.

“You can only embrace and regulate it,” said Soto.