U.S. Presses for Strong Swiss Cryptocurrency Rules
September 10 2019 - 3:13PM
Dow Jones News
By Caitlin Ostroff and Parmy Olson
The U.S. urged Switzerland to ensure its regulations governing
cryptocurrencies are strong enough to prevent abuse, as the
European banking hub prepares to host Libra, a digital currency
proposed by Facebook Inc.
The U.S. Treasury, along with other government officials and
central bank officials, have raised questions about the Libra
currency, which Facebook proposed earlier this year as part of a
digital-payments system it plans to base partly in Geneva, and take
mainstream to its more than two billion users.
U.S. and Swiss officials met Tuesday in Bern, Switzerland, to
discuss regulations that would apply to Libra, and cryptocurrencies
more broadly, to prevent the use of such digital cash for money
laundering and other illicit purposes.
Sigal Mandelker, undersecretary of the Treasury for terrorism
and financial intelligence, briefed reporters Tuesday after meeting
with Swiss government officials. She said they discussed the need
for making sure that Swiss regulations are strong enough to ensure
that such digital currencies don't lure bad actors.
Long famous for its bank-secrecy laws, Switzerland has
increasingly embraced global norms of financial transparency, and
it has also recently promoted itself as a hub for financial
technology and innovation. Ms. Mandelker said because of that push,
"it's incumbent...to take these particular concerns [up] at the
highest level."
A spokesman for the Swiss Financial Market Supervisory Authority
declined to comment on the talks with the U.S. It pointed to recent
guidance by the agency on how it is combating money laundering that
could be conducted through cryptocurrencies.
Facebook said in June that it was preparing a new cryptocurrency
to eventually help facilitate all sorts of online payments. It has
said the currency would be backed by hard assets, to protect
against the sort of wild swings that bitcoin and others have
suffered.
It created a subsidiary called Calibra that would distribute a
digital-wallet app, as well as the not-for-profit Libra
Association, based in Geneva, that would govern the system.
Facebook chose to register the Libra Association in Switzerland
because of that country's openness to blockchain technology and its
long history of global neutrality and stability, Facebook has
said.
In a statement, Facebook said it viewed engaging with regulators
and policy makers as crucial to Libra's success. "The time between
now and launch is designed to be an open, collaborative process. We
will take the time to get this right," a company spokesperson
said.
Ms. Mandelker said Facebook, as well as other cryptocurrency
projects, would be held to the highest standards in the U.S.
Treasury Secretary Steven Mnuchin has in the past raised concerns
that Libra and other cryptocurrencies could pose a national
security threat as a channel for bad actors to "fund their malign
behavior."
Concerned about the risk that cryptocurrencies like Libra could
pose in the hands of drug traffickers, terrorists and other bad
actors that threaten national security, the U.S. Treasury has
championed new standards. It was at the Treasury's initiative that
the Financial Action Task Force, a secretive international body
that monitors countries' efforts to fight terror financing and
money-laundering, in June set new standards for cryptocurrencies.
As a member of FATF, Switzerland committed to those new
standards.
--Ian Talley contributed to this article.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com and Parmy
Olson at parmy.olson@wsj.com
(END) Dow Jones Newswires
September 10, 2019 14:58 ET (18:58 GMT)
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