In a press conference on Monday, US Treasury Secretary Steven Mnuchin expressed his concerns regarding the role that Facebook’s Libra could potentially play in financing terrorism and facilitating money launderers. He even termed it a “national security issue.”
Mnuchin said:
“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.”
He was of the view that the folks over at Facebook had a lot of work to do and that he was not comfortable with the launch of Facebook’s new cryptocurrency yet. “The president does have concerns as it relates to bitcoin and cryptocurrencies — those are legitimate concerns that we have been working on for a long period of time,” Mnuchin said, talking about President Donald Trump’s recent attack on cryptocurrencies through a series of tweets a few days ago.
In his tweets, President Trump said that he was “not a fan” of cryptocurrencies like Bitcoin. He also proposed that Facebook, which plans on launching its global stablecoin next year, would need a bank charter to do so. Following Trump’s criticism on Twitter, Bitcoin lost a chunk of its value; right now Bitcoin is trading at around $9,500 after it has reached a peak of above $13,700 several weeks ago, about 30% drop.
In response to the Treasury Secretary’s remarks, Facebook said that they anticipated a “critical feedback” from regulators around the world regarding compliance and legislation. Facebook also said that they announced Libra a year before its launch so that there was enough time to have those conversations.
Furthermore, the Financial Crimes Enforcement Network (FinCEN), a bureau of the Department of the Treasury, will also be examining Libra and Bitcoin, and will hold any business or private entity that transacts with either “to the highest standards,” Mnuchin said.
Rehashing the Same Elements as with Bitcoin?
Coin Center’s director of research Peter Van Valkenburgh tweeted shortly after the press conference where he highlighted the two main points that Mnuchin focused on.
“Treasury Secretary’s speech focused on two things that they’ve already done to deal with Bitcoin: (1) offer clear guidance about how custodians must comply with BSA as money transmitters and (2) export those policies abroad through the FATF.”
Regulators across the globe have come out against Libra with harsh criticism. Facebook has so far bent the knee to answer to the calls of regulators, hoping for leniency and freedom to operate. We expect to learn a lot more about Libra as we rapidly move forward towards the launch.
