US Treasury Briefing on Regulatory Issues Related to Cryptocurrencies

Last month, the Libra Association—a consortium of 28 businesses, including a Facebook subsidiary—announced that it is developing a crypto-currency called the “Libra.” The Treasury Department has expressed very serious concerns that Libra could be misused by money launderers and terrorist financiers. Crypto-currencies, such as Bitcoin, have been exploited to support billions of dollars of illicit activity in the form of cyber crime, tax evasion, extortion, ransomware, illicit drugs, and human trafficking. Many players have attempted to use crypto-currencies to fund their malign behavior. This is indeed a national security issue. 
The United States has been at the forefront of regulating entities that provide crypto-currency. The United States will not allow digital asset service providers to operate in the shadows and will not tolerate the use of crypto-currencies in support of illicit activities, said Secretary Mnuchin. The U.S. welcomes responsible innovation, including new technologies that may improve the efficiency of the financial system and expand access to financial services. With respect to Facebook’s Libra and other developments in crypto-currencies, the overriding goal is to maintain the integrity of financial system and protect it from abuse. The U.S. Treasury takes very seriously the role of the U.S. dollar as the world’s reserve currency and it will continue its efforts to protect country and secure the U.S. and global financial systems.
 
The U.S. Treasury has been very clear to Facebook, Bitcoin users, and other providers of digital financial services that they must implement the same anti-money laundering and countering financing of terrorism—known as AML/CFT—safeguards as traditional financial institutions. Money transmitters of crypto-currency must comply with the relevant Bank Secrecy Act obligations, known as BSA, and register with the Financial Crimes Enforcement Network, known as FinCEN, which is a bureau of the U.S. Department of Treasury with the mission to safeguard the financial system from illicit use, combat money laundering, and promote national security through the dissemination of financial intelligence. As money service businesses, crypto-currency money transmitters are subject to compliance examinations just like every other U.S. bank. He said, "To be clear: FinCEN will hold any entity that transacts in Bitcoin, Libra, or any other crypto-currency to its highest standards."
 
Mr. Mnuchin highlighted that he also recently established the FSOC Working Group on Digital Assets. This FSOC group enables U.S. financial regulators, such as FinCEN, FED, OCC, CFTC, CFPB, SEC, and other key stakeholders to work together to combat risks posed by crypto-currencies. Given the international nature of crypto-currencies, we are also going to great lengths to ensure that effective regulation does not stop here at the U.S. border. Last month, led by the United States, the Financial Action Task Force, known as FATF, the global standard-setter for AML/CFT, adopted comprehensive measures on how countries must regulate and supervise activities and providers in this space. This was a major step toward harmonizing international regulations concerning crypto-currencies. There has been extensive work at the G20 and this issue will be addressed again this week at the G7 Finance Minister in France.

 
Related Link: Statement

Keywords: Americas, US, Banking, Crypto Assets, Libra, Facebook, Fintech, AML/CFT, US Treasury