Mnuchin says financial regulators will probe impact of cryptocurrencies
Treasury Secretary Steven Mnuchin said Friday that an interagency group of regulators is reviewing the impact of cryptocurrencies like bitcoin on the United States financial system.
Mnuchin, during an interview at the Economic Club of Washington, said that the Financial Stability Oversight Council (FSOC) created a working group to examine digital currencies like bitcoin.
The FSOC was created under the Dodd-Frank Act of 2010 as a means through which top financial regulators could gauge and respond to risks to the economy.
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Mnuchin said Friday that his primary concern with cryptocurrencies is their potential use for money laundering or illicit finance.
“We want to make sure that bad people cannot use these currencies to do bad things,” Mnuchin said, insisting companies that run cryptocurrency holding accounts are subject to the same know-your-customer laws as banks.
Mnuchin said the U.S. will work with G20 nations to ensure cryptocurrency accounts don’t “become the Swiss-numbered bank accounts” known for their secrecy.
Even so, Mnuchin said he was “not at all” worried about Russia’s announced plans to develop a cryptocurrency designed to evade international sanctions.
“I don’t think that’s a concern,” said Mnuchin, who as Treasury secretary oversees the enforcement of sweeping financial sanctions on Russia and other countries.
Mnuchin also echoed concerns from fellow regulators about the volatile trading values of cryptocurrencies.
“There’s a lot of speculation in this,” Mnuchin said. “I want to make sure that consumers who are trading this understand the risks, because I am concerned that consumers can get hurt.”
The Treasury secretary is the chairman of the FSOC, which also includes the chairmen of the Federal Reserve, Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC) and Federal Deposit Insurance Corporation, along with the Comptroller of the Currency and director of the Consumer Financial Protection Bureau.
The SEC, CFTC and Fed have all issued formal warnings about the risks of cryptocurrency investments, and plan to boost their oversight of that sector.
The SEC has warned investors that firms and brokers who offer cryptocurrency investments are often breaking federal trading laws. The CFTC has announced plans to review bitcoin futures trading, and both SEC Chairman Jay Clayton and CFTC Chairman Christopher Giancarlo will testify in February before the Senate Banking Committee during a hearing on cryptocurrencies.
Randal Quarles, the Fed’s vice chair of supervision, said in November that the widespread use of digital currencies could threaten financial stability, adding that central banks should “tread cautiously” when considering creating their own.