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Treasury to Roll Out Cryptocurrency Rules
The rules will improve transparency in hopes of stopping money laundering.
By Alan Rappeport and
WASHINGTON — The Trump administration plans to introduce regulations for cryptocurrencies that are intended to crack down on their use in facilitating money laundering and other illicit activities, Treasury Secretary Steven Mnuchin said on Wednesday.
Mr. Mnuchin told lawmakers that the regulations were being developed with other agencies and financial regulators to improve transparency surrounding digital currencies like Bitcoin. The administration has expressed growing concern over the use of such currencies to anonymously execute illegal transactions and potentially evade American sanctions on countries like Iran.
“We are about to roll out some significant new requirements,” Mr. Mnuchin said during a hearing before the Senate Finance Committee. “We want to make sure that technology moves forward; on the other hand, we want to make sure cryptocurrencies aren’t used for the equivalent of old Swiss secret number banking.”
Mr. Mnuchin did not provide details of what the regulations would entail. He said that they would provide greater transparency so that law enforcement could see where money was going and ensure that it was not being used to aid money laundering.
After playing down the risks of cryptocurrencies at the beginning of Mr. Trump’s term, Mr. Mnuchin said over the summer that they posed a national security threat. He also said that he had “very serious concerns” about Libra, the digital currency that Facebook is developing.
President Trump has also expressed skepticism about cryptocurrencies, declaring last year that he was “not a fan” and that their value was volatile and “based on thin air.” He warned at the time that Facebook must seek a banking charter and follow all bank regulations if it wanted to be in the digital currency business.
As part of his effort to more closely police cryptocurrencies, Mr. Mnuchin has been pushing to relocate the Secret Service back to the Treasury Department from the Department of Homeland Security. In the budget proposal the White House released this week, the administration cited the importance of the Treasury Department and Secret Service working together to monitor the use of cryptocurrencies, which it cited as “an emerging threat.”
The United States is also exploring the costs and benefits of developing its own digital currency. While Mr. Mnuchin said on Wednesday that he did not believe one was necessary in the next several years, Jerome H. Powell, the chair of the Federal Reserve, said at a separate Senate hearing that the central bank had been studying what one would look like.
“The benefits would include perhaps greater financial inclusion, lower costs, more convenience,” Mr. Powell said, noting that there would also be a risk for more fraud and reduced privacy. “There’s a lot to weigh and a lot to work on there. Every major central bank in the world right now is doing a deep dive on digital currencies, and we think it is our responsibility to be at the very forefront of knowledge and thinking about a central bank digital currency.”
Mr. Powell said that depending on the design of such a currency, the Federal Reserve might need approval from Congress to move forward.
“If we conclude that we need more authority, and that this is something appropriate to do, then we’ll ask for that authority,” he said.
Despite the Treasury Department’s plans to take a more aggressive approach to dealing with cryptocurrencies, the department’s top job of combating illicit finance is facing a prolonged vacancy. The White House on Wednesday officially withdrew the nomination of Jessie K. Liu, the former United States attorney for the District of Columbia, as under secretary for terrorism and financial crimes. Mr. Mnuchin, who confirmed that Mr. Trump had withdrawn the nomination, would not disclose the reason.
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