U.S. Treasury Secretary Steven Mnuchin talked about Libra and Bitcoin at a press conference held at the White House on Monday (July 15). We examine his comments, their effects on the Bitcoin price, and reactions from the crypto community.
Steven Terner Mnuchin was sworn in as the 77th Secretary of the Treasury on 13 February 2017. He is the chairman of the Committee on Foreign Investment in the United States (CFIUS) as well as a member of the National Security Council. Earlier in his career, Mnuchin was a Partner and Chief Information Officer at U.S. investment bank Goldman Sachs.
Mnuchin’s Comments on Libra and Bitcoin
Mnuchin started this briefing by saying that he considered the illicit uses of cryptocurrencies, such as Bitcoin, a matter of national security:
Cryptocurrency such as Bitcoin had been exploited to support billions of dollars of illicit activity like cybercrime, tax evasion, extortion, ransomware, illicit drugs, human trafficking. Many players have attempted to use crypto currencies to fund their malign behavior. This is indeed a national security issue.
And this is why the U.S. Treasure is concerned about Facebook’s proposed cryptocurrency Libra. He stressed that the U.S. government will neither “allow digital assets service providers to operate in the shadows” nor will it “tolerate the use of the cryptocurrencies in support of illicit activities.”
Next, he pointed out that all “providers of digital financial services” must respect AML and CFT regulations (just like banks). In particular, money service businesses must comply with the Bank Secrecy Act (BSA) and register with Financial Crimes Enforcement Network (FinCEN), which is a bureau of the U.S. Department of Treasury, and FinCEN will “hold any entity that transacts in Bitcoin, Libra or any other cryptocurrency to its highest standards.”
The Treasury Secretary also mentioned that he had recently set up the Financial Stability Oversight Council’s working group on digital assets. This FSOC group will enable “U.S. financial regulators such as FinCEN, the Fed, OCC, CFT, CFPB, S.E.C. and other key stakeholders to work together to combat risks posed by cryptocurrencies.”
With regard to Bitcoin, Mnuchin echoed President Donald Trump’s recent comments (on Twitter) regarding Bitcoin, and more specifically, the fact that it is “highly volatile and based on thin air.” The Treasure Department is “concerned about the speculative nature of Bitcoin” and wants to make sure that “the U.S. Financial system is protected from fraud.” Mnuchin wants U.S. investors who want to put some of their money into Bitcoin and other cryptocurrencies “to be careful.”
Mnuchin also made it clear that using crypto for “speculation” purposes is OK (provided that investors understand the inherent risks of delaing with highly volatile assets), but those planning to use crypto for “illicit activities” would be caught.
As for Libra, Mnuchin said that he was not currently “comfortable” with Libra, and that Facebook (and the rest of the Libra Association) are “a long way” away from the point where there the administration would feel comfortable.
Effect of Mnuchin’s Comments on the Bitcoin Price
There was a huge sigh of relief in the crypto markets upon the realization that Mnuchin’s comments regarding Bitcoin suggest that the U.S. government has no intention of placing an outright ban on Bitcoin (or other cryptocurrencies).
Here is the 24-hour Bitcoin price chart (as provided by CryptoCompare):
As you can see, at the time of writing, Bitcoin (BTC) is trading at $10,766, up 5.07% in the past 24-hour period.
Reactions From the Crypto Community
In general, the crypto community on Twitter seems to find Mnuchin’s comments regarding Bitcoin reassuring and somewhat bullish.
Here are a few reactions:
Macro Economist and Crypto Trader/Analyst Alex Krüger:
Mnuchin issued a warning to those not complying with US AML laws. No talk of a ban. Said specifically that bitcoin speculation is OK.
Based on the weekend's sell-off, seems key players knew in advance about this press conference, and sold into it. Seeing short covering now.
— Alex Krüger (@krugermacro) July 15, 2019
▷ Bullish for US regulated exchanges
▷ Bearish for international unregulated exchanges
▷ Bearish for DeFi
▷ Bullish for blockchain analytics companies focusing on monitoring, AML, etc.
▷ Bearish for privacy coins
— Alex Krüger (@krugermacro) July 15, 2019
Brad Garlinghouse, the CEO at Ripple:
When I read the Libra whitepaper – outlining a goal to create a new fiat currency – it was clear to me that the effort should be held to the same standard as other regulated financial institutions. (4/7)
— Brad Garlinghouse (@bgarlinghouse) July 15, 2019
Anthony Pompliano (aka “Pomp”), Co-Founder and Partner at Morgan Creek Digital Assets:
Treasury Secretary Steve Mnuchin basically told everyone to follow the rules and not doing illegal things with Bitcoin or crypto.
Sounds like a green light for those who want to do things the right way 🙏🏽
— Pomp 🌪 (@APompliano) July 15, 2019