Risk & Compliance

Mnuchin Warns of Cryptocurrency Security Risks

Facebook's proposed Libra digital currency “could be misused by money launderers and terrorist financiers," the treasury secretary says.
Matthew HellerJuly 16, 2019
Mnuchin Warns of Cryptocurrency Security Risks

U.S. Treasury Secretary Steven Mnuchin echoed his boss’s concerns about cryptocurrencies, saying he was “not comfortable” with Facebook’s proposed Libra digital currency, in part due to the risk it could be misused by criminals and terrorists.

According to The New York Times, Mnuchin’s comments at a news conference on Monday are “the latest indication that Washington is preparing to exert its power over digital currencies.”

In a series of Twitter posts last week, President Trump said he was “not a fan” of cryptocurrencies and that they can be used to “facilitate unlawful behavior,” including drug trafficking.

Mnuchin expressed similar concerns, noting that “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.”

The treasury secretary said Libra “could be misused by money launderers and terrorist financiers,” and he is “not comfortable” with Facebook launching it at this time.

“They have a lot of work to do,” he said.

Facebook blockchain lead David Marcus is expected to testify this week before both Senate and House lawmakers. The company hopes Libra will become a new global currency and the foundation for an alternative global financial system.

As the Times reports, the Trump administration “has said little about cryptocurrencies in the past two years, despite their growing popularity” but Facebook’s announcement of Libra “has spurred Washington’s interest in cryptocurrencies.”

“Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals,” Marcus said in testimony released ahead of the Senate Banking Committee hearing.

According to Mnuchin, representatives from Facebook have met with Treasury officials, as well as other government agencies. “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.

Federal Reserve Chair Jerome Powell said last week that the central bank had “serious concerns” about Libra and had been in contact with Facebook regarding its project.

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