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U.S.Treasury Secretary Talks Tough On Cryptocurrency

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The Trump administration intensified its tirade against cryptocurrencies, with Treasury Secretary Steven Mnuchin calling it "a national security issue."

In a news conference Monday, Mnuchin cautioned Americans to think twice before investing in cryptocurrencies, citing incidents of Bitcoin being exploited to finance terrorism, and other illicit activities such as cybercrime, tax evasion, extortion, ransomware, illicit drugs and human trafficking.

"Many players have attempted to use cryptocurrencies to fund their malign behavior. This is indeed a national security issue," Mnuchin told reporters.

In the press conference, Mnuchin expressed the Treasury's serious concerns over "the growing misuse of virtual currencies by money launderers, terrorist financiers, and other bad players."

He insisted that the government will not allow digital asset service providers to operate in the shadows and will not tolerate the use of cryptocurrencies in support of illicit activities.

He said the Treasury Department has been very clear to Facebook, bitcoin users, and other providers of digital financial services that they must implement the same anti-money laundering (AML) and countering financing of terrorism (CFT) safeguards as traditional financial institutions.

Money transmitters of cryptocurrency must comply with the relevant Bank Secrecy Act obligations, and register with the Financial Crimes Enforcement Network, or FinCEN.

He reminded that as money service businesses, those who conduct financial transactions through cryptocurrency are subject to compliance examinations just like every other U.S. bank.

Mnuchin made it clear that FinCEN will hold any entity that transacts in Bitcoin, Libra, or any other cryptocurrency "to its highest standards."

He said the Trump administration is concerned about the speculative nature of Bitcoin and will make sure that the U.S. financial system is protected from fraud.

The G7 Finance Ministers' meeting in France later this week will address measures to streamline international regulations on cryptocurrencies, Mnuchin added

The Treasury Secretary's tough talk on cryptocurrencies come on the eve of Congressional hearings on Facebook's Libra project.

David Marcus, Facebook's blockchain lead, will testify before the Senate Financial Services Committee on Tuesday about how Libra would operate and what protections would be implemented to ensure user privacy. The House panel is scheduled to hold hearing on Wednesday.

The Treasury Department had expressed very serious concerns that Libra could be misused by money launderers and terrorist financiers after the Libra Association, a consortium of 28 businesses, including a Facebook subsidiary, announced plans to develop a new cryptocurrency last month.

Last week, President Donald Trump had issued a series of statements denouncing all cryptocurrencies, including Bitcoin. He also questioned the credibility of Facebook's Libra cryptocurrency project.

A group of Democrat lawmakers also recently called on Facebook to freeze the Libra project.

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