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What to Make of Mnuchin’s Statement on Cryptocurrency?

What to Make of Mnuchin’s Statement on Cryptocurrency? 1

Regardless of how your politics align, one thing that most analysts agree on is that the Trump Administration isn’t very predictable, perhaps more so on what it says than its actions. That’s not a criticism, as such, just a reality in American politics right now. Of course, that filters into the administration’s economic rhetoric; covering everything from breaking up Big Tech, investigating “treasonous” Google, tariffs, the President demanding the Fed cut interest rates and so on.

So, what do we make, then, of secretary of the treasury, Steve Mnuchin, and his latest statement on cryptocurrency? The key takeaways from Mnuchin’s mid-July press conference on cryptocurrency can essentially be summed up as the administration seeing cryptocurrency as a national security threat.

Mnuchin said: “Cryptocurrencies such as bitcoin have been exploited to support billions of dollars of illicit activity like cyber-crime, tax evasion, extortion, ransomware, illicit drugs and human trafficking,”

Trump “not a fan” of cryptocurrencies

The press conference came at a time when President Trump, who is “not a fan” of crypto, is claiming social media companies have bias against conservatives, so it will come as no surprise to that Mnuchin cited Facebook’s Libra project a lot, suggesting that Facebook might need a bank charter in order to launch its cryptocurrency next year.

It has, of course, been a wonderful year so far for anyone who had the foresight to buy bitcoin in early 2019. But the Trump administration’s upping of rhetoric on the issue has caused some to start thinking about the future. It’s way too early to state if the tremendous run seen from April to early July will come to a skidding halt or decline, but it’s almost certain that politics and crypto will be mixing more in the near future.

Regulation doesn’t necessarily have to be a bad thing for cryptocurrency, of course. Purist might shudder at the thought of removing the “decentralized” element of cryptocurrencies, but there is no precedence to say that regulation will hurt those wanting to make profits from investing in crypto. Indeed, the fear for most bitcoin investors is not regulation, in the sense of brining the digital currencies under mainstream oversight, but the possibility of a backlash against them, i.e. regulating them out of existence. There is a big difference between those two possibilities.

Trump Admin unclear about future regualtion of crypto

So, where do Mnuchin and, more importantly, Trump stand on that spectrum? Are they for regulation of cryptocurrency? Or do they wish to thwart its rise? It’s no coincidence that we saw some sharp drops in bitcoin in the days following Mnuchin’s speech, although it also served to highlight the intertwined relationship between bitcoin’s price and the sentiment around Libra. But the truth is that nobody truly knows where the Trump Administration sits on cryptocurrency. There is a lot of talk, but little in the way of clear, succinct policy proposals.

What to Make of Mnuchin’s Statement on Cryptocurrency? 2

Moreover, it’s feasible that we will see a new occupant of the Oval Office in around 18 months, and that could really change things. Elizabeth Warren, one of the frontrunners, has also been critical of bitcoin in the past, but she has also been credited with sending the price of bitcoin higher. Why? Because she talks constantly about taxing the ultra-rich, and cryptocurrency is seen as a means (by some) of moving capital out of reach of tax authorities. One eye should be kept on the White House at the moment, and the other on the candidates who want take up residence there in 2021.

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