The US Treasury plans to introduce new rules and regulations on Digital currencies intended to crack down on its use to facilitate money laundering and other illicit activities
Steven Mnuchin, the treasury secretary told a Senate Finance Committee that the Financial Crimes Enforcement Network will soon announce new rules on digital payment and cryptocurrency. The primary concern with digital currency adoption is the issue of scams, opacity and ambiguous trade-offs that seem unconventional to traditional finance. Mnuchin hopes the new rules to improve transparency in order to stop money laundering and will prevent the use of cryptocurrencies as a “secret bank accounts”.
The US administration has expressed concern about the increased use of crypto in the execution of anonymous and illegal transactions. Additionally, the lurking potential of evading American Sanctions by nations like North Korea and Iran remains a huge threat to the blockchain.
He did not hesitate to suggest that the framework was a representation of the government’s support for the new technology; as well as caution of avoiding digital currencies becoming the equivalent of the ancient Swiss Secret number banking. Nonetheless, the charing did not provide further details entailing the new regulations. However, the Treasure Secretary highlighted they would offer improved transparency for law enforcement; and a guide for the enforcement to track where money was going and prevent laundering.
President Trump was not hesitant to express skepticism about digital currencies. Last year, the president told Twitter followers that he is “not a fan” of Bitcoin and other cryptocurrencies. Adding to the note, he described cryptocurrencies as volatile and based on thin air. Furthermore, he would warn Facebook that they should seek a banking charter and adhere to banking regulations; if they were to issue a digital currency.
Mr. Mnuchin’s efforts to closely monitor cryptocurrency saw the relocation of the Secret Service towards the treasure Department, rather than Homeland Security. In the White House Budget proposal released this week, the administration cited the efficiency of policing cryptocurrencies through the treasury department and the secret service. White House has identified how cryptocurrencies are used as an emerging threat.
Nevertheless, the United States Federal Reserve stated in a separate hearing; that it was exploring how a US digital currency would look like. The Federal Reserve said it had studied the costs and benefits of implementing the digital currency. As well as the implications of the same in the global economy. However, Mr. Mnuchin had stated on Wednesday that he didn’t believe a digital dollar was even necessary.
But the Secretary said it was also a project to consider somewhere down the road. For instance, Jerome Powell noted that a Federal Reserve digital currency also posed the threat of low privacy and high fraud. The Chair of the Federal Reserve, Mr. Powell stated:
“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.”
The creation and deployment of one such government-issued digital currency would need approval from congress.