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US Government Worried Crypto Can Shift Power to Private Sector

November 28, 2019 by Admin

By Kevin Helms

Cryptocurrency is one of the top issues for the U.S. Treasury. Particularly, the Treasury is worried decentralized cryptocurrencies can shift some functions away from the government to the private sector and raise the issue of self-government, according to Deputy Secretary of the Treasury Justin Muzinich.

Also read: US to Strictly Enforce Crypto Rules Similar to FATF Guidelines

Power Shift, Self-Government

Deputy Secretary of the U.S. Treasury Justin Muzinich discussed the Treasury’s priorities at the annual conference of the Bank Policy Institute (BPI) in New York last week. One area he focused on was payments, particularly cryptocurrencies. While acknowledging the value of innovation and welcoming efficiency improvements, he said:

Decentralized privately-issued digital currencies are not simply a means of payment, but, depending on their structure, can shift some functions traditionally performed by government to the private sector.

Muzinich added that “Digital currencies at scale raise not only concrete questions about money laundering, monetary policy, and other topics, but also very abstract questions about self-government.” The other topics he referred to included financial stability, user protection, and privacy. Due to these risks, the deputy secretary warned that those engaged in crypto markets should expect that “policymakers, in pursuing the public interest, will take a very hard look at these issues.”

US Government Worried Crypto Can Shift Power to Private Sector
Deputy Secretary of the U.S. Treasury Justin Muzinich

While the Financial Stability Board (FSB) does not consider cryptocurrency a financial stability risk at this time, the Federal Reserve said stablecoins are a risk to the country’s financial system in a report issued earlier this month. The Fed believes that “the possibility for a stablecoin payment network to quickly achieve global scale introduces important challenges and risks related to financial stability, monetary policy, safeguards against money laundering and terrorist financing, and consumer and investor protection.”

Crypto Makes Enforcing Laws Difficult

The deputy secretary also discussed crypto-related problems the Treasury faces under the existing regulatory framework. Talking about national security, he revealed that “One of the issues at the top of Treasury’s mind is that digital currencies can potentially be used to evade existing legal frameworks.” Some problem areas he mentioned were taxation, anti-money laundering (AML), and countering the financing of terrorism (CFT).

“We recognize that there is no way to fully future-proof our regulatory system and tackling these policy challenges will require ongoing work,” Muzinich admitted. Emphasizing that the Treasury has made it clear that U.S. laws apply to both fiat and digital currencies, he noted:

If a cryptocurrency allowing anonymous transactions were to grow to scale, enforcing laws that prevent crime and terrorist financing could be more difficult.

US Government Worried Crypto Can Shift Power to Private Sector
U.S. Treasury Secretary Steven Mnuchin

Muzinich’s statement echoes several concerns raised by U.S. Treasury Secretary Steven Mnuchin. At a White House press briefing in July, Mnuchin said that the Treasury had “serious concerns” regarding the growing misuse of digital assets. “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,” he told the press, adding:

This is indeed a national security issue.

Mnuchin also emphasized that crypto service providers must implement the same AML and CFT safeguards as traditional financial institutions. Furthermore, money transmitters must comply with relevant Bank Secrecy Act obligations and register with the Financial Crimes Enforcement Network (Fincen), which recently reiterated that it will strictly enforce AML rules on crypto service providers. Fincen’s rules are similar to the recommendations by the Financial Action Task Force (FATF), an intergovernmental AML watchdog. At the FATF plenary meeting in June, Mnuchin said the U.S. “will allow for proper use, but we will not tolerate the continued use for illicit activities.” He additionally revealed that he had “convened a working group with the Federal Reserve and other regulators to make sure we keep the use of digital assets for legitimate use only.”

Do you think the U.S. government should worry about cryptocurrency? Let us know in the comments section below.


A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

Images courtesy of Shutterstock, the Wall Street Journal, and Scmp.

This article was sourced from Bitcoin.com

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Filed Under: Uncategorized Tagged With: Cryptocurrency, Free Market, Kevin Helms, Regulations

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  • How to become invisible to mass surveillance leveraging cryptocurrency, privacy tools, and encryption to survive the digital revolution - pg 7
  • If you're an entrepreneur, listen up: You have an ENORMOUS opportunity to serve an emerging, growing market of young crypto-enthusiasts who want to do business with you, regardless of what you sell (they’re just waiting for you to offer THIS and they'll flock to you - it’s inevitable) - pg 15
  • 6 ways to acquire land and obtain higher levels of independence even if you don’t want to sell your home and move...you’re stuck in an urban area for work...you have poor credit...or you can’t afford a down payment...ANYONE can find wealth-building land for purchase or rent using these proven strategies - pg 20
  • And a whole lot more than this...
  • PLUS, get our exclusive Bitcoin & Silver Reports breaking down the factors driving their prices, the trends to pay attention to, and how to quickly capitalize on opportunities when they appear for long-term profits and financial security. 

PLUS, receive our exclusive daily emails with tips, tactics, and promotions for living free in an unfree world. 

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