US Treasury Secretary Steve Mnuchin weighed in on the Facebook Libra cryptocurrency. In comments to the press, he stated the potential digital currency could be a threat to the US’s national security.
Mnuchin cited the potential for abuse by criminals and other black market actors as cause for worry. Specifically, he referenced the belief that Bitcoin is used to launder money.
“Cryptocurrencies such as bitcoin have been exploited to support billions of dollars of illicit activity like cyber crime, tax evasion, extortion, ransomware, illicit drugs and human trafficking,” he said. “[Our] overriding goal is to maintain the integrity of our financial system and protect it from abuse. We will not allow digital asset service providers to operate in the shadows.”
Facebook Responds
Even before Mnuchin’s comments, Facebook spent the last week defending its cryptocurrency project. Company representative David Marcus, who is the head of the Libra project, told the Senate Banking Committee that fears about the project are unwarranted.
Specifically, Marcus responded to allegations Libra is an attempt to either undermine, circumvent, or other wise compete with, traditional fiat currencies issues by countries.
“The Libra Association, which will manage the (Libra) Reserve, has no intention of competing with any sovereign currencies or entering the monetary policy arena,” he said. “Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals.”
It remains to be seen how the specific concerns about potential abuse by global criminal elements, or any other new and emerging fraud trends, will play out.
In addition, the Libra currency faces push back from the tech community itself. Many people believe the centralized nature of Libra on Facebook means it does not provide the decentralization necessary to be a true cryptocurrency.
With opposition on both sides and Mnuchin calling it a threat to US national security, the ultimate fate of Facebook’s new payments project remains unclear.
Sources:
https://www.banking.senate.gov/imo/media/doc/Marcus%20Testimony%207-16-19.pdf
