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Mnuchin Warns Bitcoin Users of ‘Very, Very Strong’ Regulations

Last Updated March 4, 2021 2:38 PM
Josiah Wilmoth
Last Updated March 4, 2021 2:38 PM

US Treasury Secretary Steven Mnuchin again turned his attention to bitcoin this week, warning that the Trump administration would pursue “very, very strong” enforcement of existing financial regulations to stop bad actors from using the cryptocurrency to bankroll criminal activities.

Treasury secretary: crypto could become a financial system risk

Mnuchin elaborated on the White House’s crypto stance during a Thursday morning interview with CNBC , warning that bitcoin could become a “risk to the financial system” if it becomes the equivalent of a Swiss bank account.

“We’re going to make sure that bitcoin doesn’t become the equivalent of Swiss-numbered bank accounts, which were obviously a risk to the financial system,” he said, echoing a claim he has made in the past.

Mnuchin further warned that criminals are eagerly adopting cryptocurrency for illicit purposes, to the tune of “billions of dollars of transactions.”

He then made the dubious assertion that cash isn’t used to launder money “all the time,” clapping back at a “Squawk Box” host who noted that physical US dollar banknotes remain the payment instrument of choice for many money launderers worldwide.

“I don’t think that’s accurate at all, that cash is laundered all the time,” Mnuchin replied. “We combat bad actors in the US dollar every day to protect the US financial system.”

Though not explicitly referenced, Mnuchin is likely also concerned that US geopolitical rivals, including China, Russia, and Iran have explored developing their own blockchain-based currencies to evade US economic pressures.

‘I would separate blockchain from bitcoin’

Bitcoin, Donald Trump
President Trump outed himself as a bitcoin critic. | Source: REUTERS/Leah Millis/Shutterstock; Edited by CCN.com

This is the second time in the past week that Mnuchin has addressed cryptocurrency publicly since President Trump unexpectedly slammed bitcoin in a tripartite tweetstorm. This criticism was apparently prompted by the hype over the announcement of the Libra cryptocurrency. Libra, of course, is the brainchild of social media giant Facebook, with whom Trump has a contentious relationship.

On both occasions, Mnuchin has railed against cryptocurrency’s association with criminal enterprises and promised to crack down on illicit usage. However, he has not previewed – or even teased – the adoption of new regulations. Rather, he has warned that financial regulators will enforce rules that are already on the books.

Notably, while Mnuchin confirmed that he shares many of Trump’s concerns about cryptocurrency, he declined to affirm that he believes bitcoin’s value is “based on thin air,” stating that when he used this phrase, he was quoting the president.

The former Goldman Sachs executive further stressed that the government does not want to hamper “financial innovation.”

“I think the technology has certain clear uses,” Mnuchin said, adding. “I would separate blockchain from bitcoin.”

Bitcoin price slides following Mnuchin’s warning

The bitcoin price, which was trading above $9,800 during Mnuchin’s live interview, subsequently slipped as low as $9,333 on Bitstamp. It is not clear whether Mnuchin’s remarks prompted the decline.

bitcoin price chart showing decline after Mnuchin's remarks on CNBC.
The bitcoin price slid following Mnuchin’s interview, though it’s not clear whether there is a direct connection. | Source: TradingView

The cryptocurrency has struggled throughout the week, which most analysts attribute to the drubbing that Facebook’s Libra cryptocurrency endured during two full days of congressional hearings on Capitol Hill.

The feeling among many crypto insiders is that Libra, which could be a massive catalyst for bitcoin adoption, faces a long, difficult road to regulatory approval. Even worse, concerns about Libra’s threat to the US dollar could prompt hostile legislators to draft new laws that affect all cryptocurrencies and hamper bitcoin’s growing adoption on Wall Street.