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US Treasury boss warns of “fraud” in crypto systems

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Treasury Department

A senior US official has used a speech to warn that the government will take steps to stop fraud in the financial system as a result of cryptocurrencies.

Steven Mnuchin, the US Treasury Secretary (a position equal to Finance Minister in other systems), was delivering remarks at a briefing for journalists and other members of the press.

He focused his remarks on major cryptocurrency issues of the day, such as the new blockchain-powered payment system Libra which is set to be launched by Facebook and others.

He expressed negative views on both the stability and the foundation of crypto assets.

“As the president has said, Bitcoin is highly volatile and based on thin air”, he said.

In an indication of the position of the US government on the issue, this was a follow-up to previous claims made by Donald Trump.

President Trump took to the social networking site Twitter last week to lambast cryptocurrencies and used largely the same wording as Mnuchin.

“I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity”, he wrote.

“…Similarly, Facebook Libra’s ‘virtual currency’ will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National and International.”

“We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States Dollar!” he added.

In his remarks, Mnuchin also said that the US government would try to prevent what he called “fraud”.

“We are concerned about the speculative nature of Bitcoin and will make sure that the U.S. financial system is protected from fraud”, he added.

Cryptocurrency media, however, pointed out that there were some perceived errors in Mnuchin’s analysis.

He described both Libra and Bitcoin as “cryptocurrencies”, for example, despite the fact that Libra is well known to not be a full cryptocurrency.

It is instead a so-called “stablecoin”, which means that it is backed up by fiat assets such as some near-term government securities.

Other reactions to the comments focused on the perceived bias against cryptocurrencies.

One leader in the crypto space, Barry Silbert, described it as “validation” of Bitcoin – in an apparent suggestion that Mnuchin’s remarks could actually demonstrate the value of cryptocurrencies as a government-free currency.

Mnuchin’s intervention came just a few days after the British government announced that it would be investing money and time into fighting what it described as crypto-related problems.

The Economic Crime Plan will see the British financial markets regulator go above and beyond current global standards in crypto regulation, the government promised.