Steve Mnuchin’s Comments on Libra: “Bullish news for the future of cryptocurrencies”

US Secretary of Treasury Steven Mnuchin held a press conference yesterday in advance of Capitol Hill hearings this week addressing concerns surrounding Facebook’s stablecoin Lira. Mnuchin cautioned the audience that Facebook, and any other crypto creator, must adhere to the high standards of KYC and AML laws. Illicit activity will not be tolerated whether using a digital asset or not.

Crowdfund Insider received some commentary from Dr. Tom Robinson, from Elliptic, an AML Compliance & blockchain forensics company. Elliptic has Binance as a customer and the company notes that it has previously worked with the FBI and DEA to investigate illicit blockchain activity and recently identified Hamas’ use of Bitcoin as a medium for fundraising.

Robinson said Mnuchin’s comments regarding crypto are good for the sector in the long run.

“Steve Mnuchin’s press conference on Monday confirmed that the Treasury Department’s concerns around money laundering and terrorist financing are right at the top of regulators’ priority list when it comes to cryptocurrencies. This is actually bullish news for the future of cryptocurrencies long term,” said Robinson. “The US has had a clear AML regulatory framework around cryptocurrencies for several years now, while the rest of the world, led by the Financial Action Task Force (FATF), is rapidly adopting AML regulation focused on maintaining oversight of cryptocurrency service providers.”

Robinson said that Libra, by design, seeks to achieve a goal of serving the world’s unbanked. As such two design choices have been made with Libra that will greatly reduce the risk of misuse by bad actors.

“Firstly, like Bitcoin or Ethereum, Libra is based on a transparent transaction ledger.  Secondly, Libra transactions will be processed by “validators”, which are businesses such as Mastercard and Uber. Libra transactions will only be processed if a quorum of the validators agree to do so,” explained Robinson.

It remains vitally important to determining whether Bitcoin, Libra or any other cryptocurrency transactions are connected to illicit activity. This is not just for Facebook but also for the businesses and financial institutions that are handling digital assets.

“In fact, under regulatory obligations, these companies have the obligation to understand the source of funds in their customers’ transactions, whether these are legitimate or from criminal activity,” Robinson stated. “Today,  blockchain analytics software allows companies to screen transactions, detect risk, and uncover crypto enabled crime, including money laundering, terrorist fundraising, fraud and other financial crime including ransomware or dark markets.”

While Mnuchin’s message was a clear “abide by the rules or else,” the hearings this week will touch on other aspects of Facebook’s strategic vision of the future of finance. At this point, it is hard to tell whether, or not, Libra will survive the regulatory and legislative onslaught that is queueing up to challenge the crypto.

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