US Treasury Secretary: Bitcoin a "national security issue," cryptocurrency dominated by illicit activity and speculation

Following President Trump's derisive tweet about Bitcoin, U.S. Secretary of the Treasury Steven Mnuchin held a briefing on regulating Bitcoin and Facebook's Libra because of their use in criminal activity and the threat they pose to the financial system.

An hour ago the U.S. Department of Treasury held a briefing to express its stance on cryptocurrency.

"I will focus primarily on the serious concerns the Treasury has of the growing misuse of cryptocurrency by money launderers, terrorist financiers, and other bad players."

"Cryptocurrency 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 used cryptocurrency to support their maligned behavior-this is indeed a national security issue."

Silk Road was partially responsible for accelerating the adoption of Bitcoin while it was still gaining critical mass, while its application in illegal activity is one of the cryptocurrency's major use-cases.

It's not surprising that the focus of the Treasury is on criminal uses and how businesses which transact or deal in cryptocurrency must comply with the proper regulations.

The Department of Treasury also recently established the financial stability oversight council working group over digital assets, allowing "Key" regulators such as FinCEN, the Federal Reserve, the CFTC, and the SEC to work together to combat "Risks" posed by cryptocurrency.

"I tell them to be careful. They should be clear why they're investing in them. There are a lot of good things to invest in, obviously we know about. Our number one issue is one, we don't want bad actors using cryptocurrencies. To a large extent these cryptocurrencies have been dominated by illicit activities and speculation, we will make sure the general public and investors and understand what they're investing in, and whether it's the SEC or other regulators, that there are proper disclosures."

Money service businesses and cryptocurrency money transmitters are subjected to compliance examinations just like any other bank, under the Banking Secrecy Act, assert Mnuchin.

That's not to say that the government is completely unwilling to allow Facebook to issue a cryptocurrency.