Facebook Libra Faces US Lawmakers, Mnuchin Hates Cryptos

Bitcoin Futures Trading at $10,505
Mnuchin Does Not Like Cryptos
Facebook Libra Set To Get Grilled by US Lawmakers
Crytpo and Bitcoin Futures Story of Day

Crytpo and Bitcoin Futures Story of Day


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Yesterday, US Treasury Secretary Steve Mnuchin Gave An Impromptu Press Conference Which Updated The Treasury's Views Of  Cryptocurrency And The Regulatory Issues Therein - The Clear Takeaway Was That The Treasury Wishes To Impose The Existing US Financial Regulatory Regime On Crypto Companies Both Domestic & International

The conference, which was clearly designed to be a prelude to David Marcus' testimony on Facebook's crypto plans was announced ~30 minutes before it was scheduled. Mnuchin put crypto / Bitcoin purchases into two categories: speculation and those done to facilitate illegal / malicious activities. The Secretary seemed agnostic to the first category explaining that so long as Americans understood what they were participating in they could do as they chose. Mnuchin did however, describe cryptocurrencies as supporting 'billions of dollars of illegal activity' and being a 'national security issue.' He then went on to describe regulation as meaning to provide a level playing field for existing financial institutions and new entrants alike and that, that would naturally solve crypto AML issues. On Facebook's Libra directly, the most overarching comment was that the Treasury wouldn't have an issue with the existence of Libra so long as they also met AML standards. However, Mnuchin clarified that he was not comfortable with Facebook's proposal as it stood today and that the company would have, 'a long way to go to convince us.'

Takeaway: First, addressing the Secretary's comments on Libra, this is exactly why we thought it was bizarre that Facebook wrapped what is essentially a payment network in a crypto wrapper. It's not debatable that FB would have more information through their various social channels than any bank in the World, yet because they have labeled their payment network as a cryptocurrency they are facing the same KYC and AML concerns as everybody else. In terms of the Treasury's view of cryptocurrency as a whole, the US is, unsurprisingly, not a fan of most of the characteristics that brought interest to the space in the first place (i.e anonymity, disintermediating the government/banks when it came to the storage of assets, decentralization etc...). Bitcoin actually started to rally when Mnuchin began to demarcate the US's interest in curbing illegal activity as opposed to speculation. That said, it seems quite clear from this speech that the crypto the US is comfortable with is very far from the innovative alternative financial system imagined by many of the space's pioneers. It continues to seem unlikely that the US Government will have anything but a combative approach towards Bitcoin and crypto.

About the Author

FRNT Financial is a technology and sales layer that offers institutional and accredited investors access to various forms of exposure to crypto-assets.