Connect with us

Politics

Press Briefing by Treasury Secretary Steven Mnuchin on Regulatory Issues Associated with Cryptocurrency

Published

on

White House Transcript:

 

SECRETARY MNUCHIN: Good afternoon, everybody. Thank you for being here. Recently, as you know, there’s been a great deal of interest about digital assets, including cryptocurrency, such as Bitcoin or Libra.

There are many regulatory and supervisory questions regarding Libra virtual assets and virtual currencies. But I will focus primarily on the serious concerns that Treasury has regarding the growing misuse of virtual currencies by money launderers, terrorist financiers, and other bad players.

This week, representatives of Facebook’s Calibra Project will go to Capitol Hill to discuss their proposal for a cryptocurrency, the Libra.

At the Treasury Department, across the U.S. government, and with the international financial community, there’s been a great deal of activity recently related to the regulation and the treatment of digital assets and cryptocurrencies.

I’d like to give some brief explanatory remarks about what we’ve been doing on this front, since there’s lots of interest, and then I’ll open it up to questions.

Last month, the Libra Association — a consortium of 28 businesses, including a Facebook subsidiary — announced that it is developing a cryptocurrency called the “Libra.” The Treasury Department has expressed very serious concerns that Libra could be misused by money launderers and terrorist financiers.

Cryptocurrencies, such as Bitcoin, have 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 cryptocurrencies to fund their malign behavior. This is indeed a national security issue.

The United States has been at the forefront of regulating entities that provide cryptocurrency. We 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.

Treasury has been very clear to Facebook, Bitcoin users, and other providers of digital financial services that they must implement the same anti-money laundering and countering financing of terrorism — known as AML/CFT — safeguards as traditional financial institutions.

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

Many people are not familiar with FinCEN. It is a bureau of the U.S. Department of Treasury. FinCEN’s mission is safeguard the financial system from illicit use, combat money laundering, and promote national security through the dissemination of financial intelligence.

Last year alone, it collected over 20 million BSA reports and has collected over 300 million in the last 11 years. FinCEN implements the Bank Secrecy Act’s regulation and has federal regulatory, supervisory, and enforcement authority over money service businesses and banks.

The rules governing money service providers apply to physical and electronic transactions alike. As money service businesses, cryptocurrency money transmitters are subject to compliance examinations just like every other U.S. bank.

To be clear: FinCEN will hold any entity that transacts in Bitcoin, Libra, or any other cryptocurrency to its highest standards.

I also recently established the Financial Stability Oversight Council’s Working Group on Digital Assets. This FSOC group enables U.S. financial regulators, such as FinCEN, the Fed, OCC, CFTC, CFPB, SEC, and other key stakeholders to work together to combat risks posed by cryptocurrencies.

As the President has said, Bitcoin is highly volatile and based on thin air. We are concerned about the speculative nature at Bitcoin and will make sure that the U.S. financial system is protected from fraud.

Given the international nature of cryptocurrencies, we are also going to great lengths to ensure that effective regulation does not stop here at the U.S. border. Last month, led by the United States, the Financial Action Task Force, known as FATF, the global standard setter for AML/CFT — adopted comprehensive measures on how countries must regulate and supervise activities and providers in this space. This was a major step towards harmonizing international regulations concerning cryptocurrencies.

We have also had extensive work at the G20, and I will be addressing this again this week at the G7 Finance Minister in France.

To be clear, the U.S. welcomes responsible innovation, including new technologies that may improve the efficiency of the financial system and expand access to financial services. That being said, with respect to Facebook’s Libra and other developments in cryptocurrencies, our overriding goal is to maintain the integrity of our financial system and protect it from abuse.

Treasury takes very seriously the role of the U.S. dollar as the world’s reserve currency, and we’ll continue our efforts to protect our country and secure the U.S. and global financial systems.

With that, I know there’s been a lot of interest in this subject and perhaps and few others, so I’ll take a few questions.

In the back.

Q Thank you, Mr. Secretary. Two questions for you, if you don’t mind. The first one is, Jay Powell, from the Fed, said last week that FSOC would be meeting in the future to discuss Facebook’s Libra product specifically. Has that happened yet?

And then, secondly, you talk about Facebook putting this product out. If Facebook is able to ultimately resolve all of your concerns about AML and other issues, do you want Facebook to be in the business of issuing cryptocurrencies?

SECRETARY MNUCHIN: So let me make the first comment in, which is: We — and I say “we,” either at the principals’ level or at the deputies’ level — we’ve had multiple meetings across the regulators with representatives of Facebook, and expressed our concerns. We’ve also had multiple meetings of the FSOC Working Group. I think you know Jay Powell and I meet weekly, and we’ve talked about this extensively.

So there are these discussions going on. They will continue to go on. Again, to the extent that Facebook can do this correctly and can have a payment system, you know, correctly, with proper AML, that’s fine. They’ve got a lot of work to do to convince us to get to that place.

Q Mr. Secretary, can you address the problems of raising the debt ceiling?

SECRETARY MNUCHIN: Well, why don’t I do this: I’m sure there’s a lot of interest in that as well, but why don’t I take a bunch of cryptocurrency questions, and then —

Q Since I’ve already ask it, can you just —

SECRETARY MNUCHIN: We’ll come back to you on that. I’ll give you that. But you can ask a cryptocurrency question or I’ll just come back to you.

Q Well, I really want to talk about the debt ceiling.

Q It’s all related.

SECRETARY MNUCHIN: Okay. I’ll wait for you.

Q What are your concerns? Facebook has had privacy issues in the past. How does that play into your concern? And what is your level of concern with Facebook having Libra?

SECRETARY MNUCHIN: Well, again, I would just say we obviously have concerns with the privacy issues. There has been items in the press about potential settlements. I’m not going to comment on that.

But obviously the regulators — and one of the regulators, as I’ve said — most people haven’t heard on FinCEN. So one of the reasons I wanted to explain this is, whether they’re banks or whether they’re non-banks, they’re under the same regulatory environment for FinCEN. And we will hold them accountable. And they’re going to have to convince us of very high standards before they have access to the U.S. financial system.

Q Mr. Secretary, at the Social Media Summit last week, the President essentially accused the social media giants of an animus against conservatives. Can you assure the markets and everyone watching that whatever action this government will take is not a result of the President’s view that these social media giants are biased against him?

SECRETARY MNUCHIN: Well, again, I can — what I will tell you is the President does have concerns as it relates to Bitcoin and cryptocurrencies, and those are legitimate concerns that we’ve been working on for a long period of time.

But, no, we’re not going to target any one entity. Everybody is playing by the same rules. Again, whether you walk into a money service provider or whether you walk into a bank or you do it digitally, you’re going to have to adhere to the same rules.

Q Thank you, Secretary. Considering that Bitcoin is decentralized, what do you tell Americans who want to invest in Bitcoin and other cryptocurrencies?

SECRETARY MNUCHIN: Well, one, I tell them to be careful, okay? They should be clear why they’re investing in them. There’s a lot of good things to invest in, obviously, we know about.

But, you know, our number-one issue is that: One, we don’t want bad actors using cryptocurrencies. That’s our number-one issue. I think, to a large extent, these cryptocurrencies have been dominated by illicit activities and speculation. We’ll make sure that the general public and investors understand what they’re investing in and, whether it’s the SEC or other regulators, there’s proper disclosures.

Q Mr. Secretary, you said that you’re comfortable with Facebook launching the currency if they do it in the right way.

SECRETARY MNUCHIN: No, I didn’t say that, actually. I didn’t say I was comfortable with them launching a currency.

Q If they launched it in the appropriate and in a safe way, in terms of —

SECRETARY MNUCHIN: Yeah. But I’m not comfortable today. So let me just be careful. As I’ve said, they and others have a lot of work to do before they get us comfortable.

Q Do you have a sense of the timeline there? Is Facebook being candid with the administration about how many years it would take them (inaudible)?

SECRETARY MNUCHIN: I think they’re being very candid with the administration and where they are. I’m not going to publicly speculate how long I think it will take them to get to the point where we’re comfortable with it. But they’re — they are a long way away from — and, again, part of it, there’s been a lot of public interest in this. That’s why I wanted to give the public the assurance that, before they or anyone else does this, that we’re going to make sure the financial system is protected.

And, as I said, there’s a lot of illicit activity that we’ll be shutting down for people who are using cryptocurrencies for bad purposes.

Q Thank you, Mr. Secretary. Can you give a sense about how those discussions are going with your counterparts from other G20 countries on this particular issue?

SECRETARY MNUCHIN: I would say there’s enormous agreement on this. As I said, I was in Orlando, I think it was two weeks ago. The U.S. just finished the presidency of FATF. I gave the keynote address there. That was adopted. I mean, that is the largest organization — much bigger than the G20 — and it’s kind of the gold standard of AML. And those rules were adapted.

And, at the G20 and the G7, we have absolute, general agreement that, in the U.S., if you deal with the U.S. financial system, you have to adhere to the same rules. And that’s something that the rest of the G20 is very focused on.

Q Mr. Secretary, you said you’d take questions on a number of subjects, so I’ll ask, on another subject.

SECRETARY MNUCHIN: No. I said I was first going to — I’m first going to finish the cryptocurrencies. We’ll spend any finished —

Q Well, then I do have a cryptocurrency question, sir.

SECRETARY MNUCHIN: We’ll come back to it.

Okay. Go ahead, cryptocurrency.

Q And a follow-up. So you’ve said that Treasury is concerned about bad actors using cryptocurrency such as Bitcoin, which has become very popular among white nationalist groups. What sort of actions is Treasury taking to stop these bad actors from using these decentralized cryptocurrencies?

And I have a follow-up, sir.

SECRETARY MNUCHIN: Okay. Well, I’m not — as it relates to any specific group, I’m not going to comment on any specific group. But what I will tell you is that FinCEN has multiple investigations going on. There are — there have been enforcement actions. There will be more enforcement actions. We’re going to beef up our resources for regulatory oversight. This is something we’re absolutely focused on and on top of.

Q And while you have me, may I ask a follow-up — another question?

SECRETARY MNUCHIN: We’re going to try and give everybody one question. Thank you.

Q Mr. Secretary, what specifically, language-wise, are you looking for out of the G7 Finance Ministers Meeting? And are you confident that you’ll get a statement that has some teeth?

SECRETARY MNUCHIN: Well, we’ve had — I’d say, again, my understanding is that, you know, there’ll be a chairman’s report. There won’t necessarily be a communiqué in general, but I leave that to the French.

I will say we have working groups at the G7 and G20. This has been in the G20 notifications. I think, you know, we got a lot of interest in the digital tax. We’re focusing on the international tax issue. But this will definitely be high on our discussion issue.

Q Mr. Secretary, back in March, Treasury imposed restrictions or sanctions on the Venezuelan cryptocurrency — the petro. And our understanding is that the Venezuelan regime is still trying to keep it afloat. Can you give us an update on the results that you’ve gotten from those restrictions and whether or not you have any knowledge that the Venezuelan regiment is trying to keep (inaudible)?

SECRETARY MNUCHIN: I’m not aware of anybody who’s really using that, or it’s taken off, or had any success whatsoever.

Q So the restrictions worked?

SECRETARY MNUCHIN: Absolutely.

Q Mr. Secretary, aren’t you afraid of painting everybody with the same brush? You know, you have some of the crypto (inaudible) have been going to the CFTC; they’ve been going with the IMF and Lagarde and the ECB and every regulator, getting this done in the rules. And the Libra sort of comes up. So you’re sort of putting everybody in the same — painting the same brush for all the (inaudible).

SECRETARY MNUCHIN: No, I don’t think we’re doing that at all. As a matter of fact, you know, as I said, one of the reasons why I wanted to speak about this is there’s been lots of activity that’s been going on for the last year on this. And, you know, whether it’s Congress or other areas of the press, because of Libra, it’s caught a lot of attention and people weren’t aware of all the work that’s been going on. So that’s the purpose.

Q So can we go back (inaudible)? Let me know when you’re ready for that one.

Q Can I cross over to debt limits?

SECRETARY MNUCHIN: Any more crypto before we move on to —

Q Yes. I wonder if you can be specific as to the illicit actions that you’re referring to. Can you give us some examples, so the American people can know, if they’re interested in getting into cryptocurrency, what things to avoid?

SECRETARY MNUCHIN: Well, again, if you’re dealing with a legitimate entity in the U.S., those legitimate entities that are attached to crypto are indeed subject to the Know Your Customer rules and AML.

If you’re looking to use Bitcoin to go through those entities and go on the dark web and think you’re not going to get caught, you’re going to get caught. So this is a warning.

If you want to use it for speculation, that’s one thing. If you want to use it for illicit activities, we’re going to put the full effort of the U.S. Treasury and the regulators onto that.

Q Do the new regulations favor traditional banks, maybe in the same ways —

SECRETARY MNUCHIN: No. This is intended to be a level playing field whether you’re MoneyGram, or you’re a bank, or you’re an online, or you’re PayPal. This is intended to be a level playing field. And, again, what we do encourage — and there’s been a lot of financial innovation away from traditional banks for electronic payment systems. Lots of people use electronic payment systems, in dollars, very effectively. And, you know, we’ll continue to support those activities. We want technology to evolve.

Q Yes. Do you believe that the rise in Bitcoin value was fueled by fraud? Have you seen evidence of that?

SECRETARY MNUCHIN: I’m not going to speculate. I have no idea why Bitcoin trade is where it is. I’m not commenting that it’s high or low. Again, I’m here to talk about the regulatory environment and warn people against illicit use.

Q Hi, Secretary. As a member of the Cabinet, the President today talked pretty extensively about his tweets about these four congresswomen. Do you find the President’s tweets racist? And what do you make of white nationalists praising those tweets?

SECRETARY MNUCHIN: Again, I think the President — I don’t find them racist. The President just went on and clarified his comments. I think he speaks for himself on that. And he was very clear.

But again, we’re focused on cryptocurrencies and then I’ll do some debt ceiling stuff.

Q Secretary, why do you think they’re not racist?

Q If I could have a follow-up.

SECRETARY MNUCHIN: Go ahead.

Q Mr. Secretary, why did you push back the 20-dollar bill redesign with Harriet Tubman? Was it to help the President save face? Because he has suggested that that redesign was done out of pure political correctness and even suggested she should be on a less popular bill.

SECRETARY MNUCHIN: Okay, well, I’ll take it we’re now going to switch off of cryptocurrency to some other things. So I’m going to give you the benefit of that. Then we’ll talk — I’ll give you some brief debt ceiling. I’m sure there’s some interest in that.

Again, there’s a lot of misinformation, okay, on this issue. And I’ve received letters being accused of postponing this and everything else. So, again, this is a non-political situation where the primary objective of changing the currency is to stop counterfeiting. And if you look at the 100-dollar bill and what went into the 100-dollar bill, that was over a 10-year process.

What people don’t understand is when it comes to counterfeiting — and again, protecting the currency is my responsibility — there are multiple ways we protect the currency. Some of these are physical things that you can see, like when you look at the 100-dollar bill and you see the thread. There are security features that you can’t see, okay? There are security features that are limited to the government being able to see. So we don’t advertise what all the security features are. But these are very complex things that, once they’re developed, then require different machinery to be made and a different manufacturing process.

So the new currency is not going to come out for a long period of time. When people talked about the design — and again, the design starts with the security features, okay? There were some preliminary art- — what I would call “artwork” — not design.

And again, even in the most optimistic scenario of me staying through the President’s second term — I’m not staying past the President’s second term — this currency isn’t going to come out. So this is not a political issue. And again, we’re happy to comment on (inaudible).

Q Mr. Secretary, back on Harriet Tubman — back on Harriet Tubman: You say it’s not a political issue, but with everything — all the controversy swirling right now as it relates to race and things that have happened before — is this an issue of race?

SECRETARY MNUCHIN: No. And matter of fact, okay, we’re going to do more research on kind of what’s been done at Treasury in the past. At some point, we will be having to look at when we have the currency. And at that appropriate time, we’ll address (inaudible). I’m going to — I’m going to —

Q And a follow-up, sir. A follow-up. Are you hopeful that the President — sir, are you hopeful that the President —

SECRETARY MNUCHIN: Everybody is going to get one question.

Q Sir, are you hopeful that the President can talk about the economy at the NAACP convention, which he was invited to come and speak to?

SECRETARY MNUCHIN: Again, I’m not aware of whether he’s going to that or not. But I always like him to talk about the economy because the economy is doing fabulous. It’s the bright spot of growth. And I’ll be very proud going to —

Q The black economy?

SECRETARY MNUCHIN: The black economy is doing terrific as well.

Q Thank you, Mr. Secretary. I have two questions for you. And I think this will address some of the questions my colleagues have. First of all, you said the President’s tweets, you find, were not racist.

SECRETARY MNUCHIN: No, no. Look, I’m not —

Q Many others find it racist, Mr. Secretary.

SECRETARY MNUCHIN: Okay. Okay, can I —

Q You are a member of the Cabinet. I want to know personally if you’re concerned that people see that tweet as racist.

SECRETARY MNUCHIN: Again, what I’m going to say is, we have a lot of important topics. I’ve already answered my one comment on this. I think I was very clear on this.

Q Respectfully, sir, I’m asking a different question.

SECRETARY MNUCHIN: Again, I think my answer is the same.

Q That you’re not concerned? I don’t want to put words in your mouth. I’d like you to speak to it directly, please.

SECRETARY MNUCHIN: Again, what I’ve already said is, I think the President clarified his comment. I understand what the President’s comment is. I’m not concerned by the President’s comment. And again, that’s the last comment I’m going to make on this issue. We have other important things to talk about.

Q On the debt ceiling — can we go to the —

Q Go ahead.

Q Thanks. And I’ll follow up. But on the debt ceiling, do you — are you planning to raise the debt ceiling? When? And will that take place before the government runs out of money?

SECRETARY MNUCHIN: Okay, well I’m glad you asked. Now we’re on a very important issue: the debt ceiling.

Q Well, the other issues are important too.

SECRETARY MNUCHIN: Unfortunately, as you know, I can’t raise the debt ceiling. That’s — it’s Congress’s job to raise the debt ceiling. What I have said — and, you know, given the importance of this, we run multiple scenarios of how we predict the government’s cash flow. I think, hopefully, everybody would agree that, to the extent we want to limit spending, we — Congress has the right to limit spending. But once we agree to spend money, we have to pay for it. And the credit of the United States government is the utmost importance.

So the debt ceiling has to be raised. One of our scenarios triggers a problem the first week of September, before they get back. So I have urged Congress to raise it before they leave.

Q But wait a minute. Wait a minute. Just to follow up, do you see a government shutdown looming?

Q Thank you, Mr. Secretary. With regards to —

SECRETARY MNUCHIN: I don’t see a government shutdown looming. Again, that’s not an issue until the end of September, and I have no expectation that there will be a government shutdown whatsoever.

Q To follow up on the issue of the debt ceiling, is a short-term extension — if you’re unable to get a longer-term deal that would punt until October — is that on the table? And can you describe the nature of your negotiations with Speaker Pelosi on this issue? Reportedly, you guys had that phone conversation on Saturday night.

SECRETARY MNUCHIN: Yeah. The Speaker and I have been speaking regularly. I think we’ve had very productive discussions. I also spoke to Mitch McConnell and Kevin McCarthy and others over the weekend. I’ve been working very closely with Mick and Russ, and I’ve had daily conversations with the President. I met with the President this morning. We updated him. I expect to speak to the Speaker again later today.

I think — I think there is a preference on both parties, to the extent we can agree on the debt ceiling and a budget deal, that that is the first choice. And I think we’re getting closer.

I would just comment that, you know, the President very much cares about the VA. I’m just commenting in regards to the Speaker’s comment. You know, the military versus the defense versus nondefense tends, at time, to be viewed as a Republican versus Democrat issue. It’s not, let me be clear.

The Republicans all care very much about nondefense as well. And we will make sure that there is enough money to support the military and what we need to do in the military — the VA and everyone else.

Q On what the President just now said — he’s not concerned that white nationalists find common cause with him —

SECRETARY MNUCHIN: Again, I’m not — I’m not answering more of these questions.

Go ahead.

Q Okay. But, sir — but, sir, may I — sir, may I finish?

SECRETARY MNUCHIN: No, no. Go.

Q You’re a Jewish American, sir.

Q I don’t want to interrupt my colleague.

Q Do you have any concern serving an administration with which white nationalists seem to find common cause and a President — and under a President who routinely says he has no problem with having the support of white nationalists?

SECRETARY MNUCHIN: Really, I — to be — to be honest with you, I find that question disrespectful to me, as Secretary of the Treasury. I’m here talking about issues that are in my domain. I’ve answered a bunch of your questions on this.

I am also on my way to DOJ to give a speech on anti-Semitism, okay? So, again, I’m happy now to turn to people who want to talk about the debt ceiling and budget.

Q Can you give, Mr. Secretary, a clear timeline for when you expect this deal to be made? And on a separate but not unrelated issue, can you give us an update on the trade talks with China and when you expect to have a sit-down meeting?

SECRETARY MNUCHIN: Sure. So, I mean, I think the leadership on both sides, and the President, would like to reach an agreement as quickly as possible. And that’s why, you know, I am speaking to the Speaker and others.

And, again, let me just say this is team effort, although I’m directly negotiating with the Speaker. I’m doing that at the direction of the President, and he’s taking input from a lot of people.

You know, I think we’re very close to a deal. But, as you know, these deals are complicated. There’s the topline number. We want to do a two-year deal. There’s typically offsets that have been negotiated as part of these deals. That’s been done every single time. So, you know, I’m very hopeful we can come to an agreement quickly.

But having said that, if for whatever reason we can’t agree on all these issues before they leave, I would either expect them to stick around or raise the debt ceiling.

Q And on China?

SECRETARY MNUCHIN: On China — Ambassador Lighthizer and I have had several conversations on China. With our counterparts. We expect to have another principal-level call this week. And to the extent we make significant progress, I think there’s a good chance we’ll go there a bit later.

Q Mr. Secretary, just to be very clear, do you expect the debt limit to be raised on time? In other words —

SECRETARY MNUCHIN: Of course, I expect the debt ceiling to be raised on time, because I would say both parties — there’s no uncertainty that neither party nor anybody wants to put the credit risk of the United States government at risk. So, yes, I expect that the debt ceiling will be raised. And, by the way, the Speaker has said that; Mitch McConnell has said that. Every (inaudible).

Last question. Thank you. Last question. Go ahead. Do you want to ask?

Q Yes. No, I just wanted to give you the opportunity for this —

SECRETARY MNUCHIN: Last question.

Q — but thank you very much. I wondered if you could address: How does the President feel about trade talks at this point? And could you also tell us how he’s feeling specifically about the job that his Commerce Secretary Wilbur Ross is doing? Has he talked to you about that at all?

SECRETARY MNUCHIN: I have every reason to think Secretary Ross is doing a good job. I’ve never heard anything otherwise. Secretary Ross has been an important part of the trade team. Again, this has been an integrated team, and I think the President is very pleased on trade.

I would say — last pitch for the Speaker and others — we’d like to see USMCA. It’s a very important economic package. And I’m hopeful. I know Ambassador Lighthizer is working with leadership on that.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Advertisement
Advertisement
Advertisement --

Trending

Daily Newsletter

Get all the breaking news delivered right to your inbox as it happens

Sign Up Now!

ONE MONTH FREE

At Your Doorstep

No more hassles running to the newsstand, as each week for a month, you can now sit back, relax and enjoy the Jewish Voice in the comfort of your own home!