Bitcoin latest: Trump official says cryptocurrency is being used for 'illicit activities' and must be regulated

Treasury secretary Steven Mnuchin suggests 

Andrew Griffin
Friday 26 January 2018 10:01 GMT
What is Bitcoin and why is its price so high?

The US is concerned that the rise of bitcoin is being used for "illicit activity", according to the US government.

Donald Trump's most senior financial policymaker has urged for international regulation to stop the use of cryptocurrencies for crime and other problem behaviour.

The Davos meeting of economic leaders has seen a number of statements about the future of cryptocurrency. Theresa May, for instance, said she was taking "very seriously" the prospect of cracking down on the use of bitcoin and other digital money.

US treasury secretary Steve Mnuchin said that he shared those concerns, and suggested that the world needed to work together to focus on cryptocurrencies to make sure that financial markets are safe.

"My number-one focus on cryptocurrencies, whether that be digital currencies or bitcoin or other things, is that we want to make sure that they're not used for illicit activities," he told the World Economic Forum in Davos, Switzerland.

"We encourage fintech and we encourage innovation, but we want to make sure all of our financial markets are safe," Mnuchin said. "We want to make sure that the rest of the world -- and many of the (Group of) 20 countries are already starting on this -- have the same regulations."

U.S.-based platforms for bitcoin and other virtual currencies must comply with anti-money laundering rules, with around 100 such platforms registered with the U.S. Treasury's Financial Crimes Enforcement Network. The rules require them to file reports on suspicious financial activity.

But many other countries have no such requirements.

Bitcoin soared more than 1,700 percent last year to a record high, raising fears that the volatile emerging asset poses a risk to investors and the global financial system.

Regulators have also warned of risks that criminals may use the virtual currencies to store and transmit their ill-gotten gains, because they can be used anonymously.

Several countries including South Korea and China have tried to slow trading of cryptocurrencies, and fears of a wider clampdown pushed bitcoin down nearly 20 percent last week.

Policymakers around the world are debating how to deal with the volatility of cryptocurrencies. A senior Bank of Japan official said on Thursday that imposing global, across-the-board regulations on their trading won't be easy.

Christine Lagarde, head of the International Monetary Fund, said countries should take into account both the risks and benefits associated with the development of the cryptocurrencies in deciding whether and how to regulate the market.

"The anonymity and lack of transparency and the way in which it conceals and protects money laundering and financing of terrorism, is just unacceptable. It needs to be taken into account but then there will be innovations coming out of these movements," Lagarde told the Davos forum.

Larry Fink, chief executive of BlackRock Inc, the world's biggest asset manager, told the forum that cryptocurrencies posed a systemic threat that needed to be dealt with globally.

He said they might be something he considered investing in but the crypto currency industry was "more an index of money laundering".

Additional reporting by agencies

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