In a White House press briefing, Secretary Steven Mnuchin of the U.S. Treasury spoke about the concerns associated with digital assets, including crypto-currencies such as Bitcoin or Libra. Recently, the representatives of Facebook’s Calibra Project were expected to go to Capitol Hill to discuss their proposal for a crypto-currency, the Libra. At the Treasury Department, across the U.S. government, and with the international financial community, there has been a great deal of recent activity related to the regulation and the treatment of digital assets and crypto-currencies. Mr. Mnuchin gave some brief explanatory remarks about what the Treasury has been doing on this front.
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
Previous ArticleBoE Publishes the Schedule for Statistical Reporting for 2019
The Prudential Regulation Authority (PRA) published the final policy statement PS21/21 on the leverage ratio framework in the UK. PS21/21, which sets out the final policy of both the Financial Policy Committee (FPC) and PRA
The Consumer Financial Protection Bureau (CFPB) proposed to amend Regulation B to implement changes to the Equal Credit Opportunity Act (ECOA) under Section 1071 of the Dodd-Frank Act.
The Prudential Regulation Authority (PRA) decided to maintain, at the 2019 levels, the buffer rates for the Other Systemically Important Institutions (O-SII) for another year, with no new rates to be set until December 2023.
The Financial Stability Board (FSB) published a progress report on implementation of its high-level recommendations for the regulation, supervision, and oversight of global stablecoin arrangements.
In a letter to the authorized deposit taking institutions, the Australian Prudential Regulation Authority (APRA) announced an increase in the minimum interest rate buffer it expects banks to use when assessing the serviceability of home loan applications.
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) are consulting on the preliminary guidance that clarifies that stablecoin arrangements should observe international standards for payment, clearing, and settlement systems.
The European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA) have set out their respective work priorities for 2022.
The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0, in addition to the reporting module on leverage under the common reporting (COREP) framework.
The European Commission (EC) published the Implementing Decision 2021/1753 on the equivalence of supervisory and regulatory requirements of certain third countries and territories for the purposes of the treatment of exposures, in accordance with the Capital Requirements Regulation or CRR (575/2013).
EC published the Implementing Regulation 2021/1751, which lays down implementing technical standards on uniform formats and templates for notification of determination of the impracticability of including contractual recognition of write-down and conversion powers.