Via Economic Policy Journal

Treasury Secretary Mnuchin

By Robert Wenzel

US Treasury Secretary Steve Munchin held a press conference at the White House on Monday to discuss cryptocurrencies.

It was not a press conference designed to comfort those using any cryptocurrencies in a manner that hides user identities.

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

Mnuchin stated that billions of dollars worth of bitcoin are being used in illicit ways. He specifically cited:

  • cybercrime
  • tax evasion
  • extortion
  • ransomware
  • illicit drugs
  • human trafficking  

He added, “What I will tell you is the President does have concerns as it relates to bitcoin and cryptocurrencies and those are legitimate concerns.”

The timing of the press conference seemed to be in response to the announcement that Facebook planned to launch a digital currency, Libra. 

Mnuchin said he is “not comfortable” with Libra launching at this time. Mnuchin went on to say that Facebook has much work to do before he will be convinced of its compliance with regulations that require customers to be identified.

But clearly, his focus was on much more than Libra. 

He said he would be discussing cryptocurrencies with G7 finance ministers during meetings in Paris this Wednesday and Thursday, and that both G7 and G20 members are on board with regulation of the cryptocurrency sector.

“We don’t want bad actors using cryptocurrencies,” he said and noted that FinCEN (The Financial Crimes Enforcement Network) has multiple investigations ongoing.

Mnuchin also highlighted the Finacial Stability Oversight Council Working Group on Digital Assets which he formed in 2018.

Whenever you hear “working group” pay attention. This is a vehicle used by the executive office that results in new power centers emerging. The Plunge Protection Team, for example, officially started off as the President’s Working Group on Financial Markets which was created by Executive Order in 1988 and signed by President Ronald Reagan.

The FSOC Working Group on Digital Assets includes top regulatory officials at the SEC, CFTC, and the Fed in addition to FinCEN. This is from where they will coordinate whatever they have in store for cryptocurrencies.

READ ALSO  Biden names Gensler as SEC head in push towards more scrutiny

If Mnuchin decides to take down cryptocurrencies the plan will be developed by this working group.

At this point, it appears that Mnuchin’s focus appears to be on shutting down shadow users that can not be identified.  But if he is unsuccessful at that, the plotting of the takedown of cryptocurrencies will emerge from this working group, and that is not taking into account what other surprises the working group in the interim might have for the cryptocurrency sector.

“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.”

“This is indeed a national security issue,” he added.