Facebook’s planned Libra cryptocurrency faced further opposition on Monday when the US treasury secretary warned about its potential criminal use.
Steven Mnuchin told a press conference it could be used by “money launderers and terrorist financiers” and said it was a national security issue.
He was “not comfortable” about Libra, joining President Donald Trump and the US central bank in voicing concern.
Facebook executives will appear before a congressional committee on Tuesday.
David Marcus, who will oversee Libra, is expected to tell the Senate Banking Committee that Facebook will not launch the currency until regulatory concerns are addressed.
Mr Mnuchin said Libra would have to convince financial regulators it has high privacy standards.
He declined to comment on any regulatory timeline for Libra, but said he was “not comfortable today” about digital currency and that Facebook was a “long way away from” securing approval.
Cryptocurrencies generally “have been exploited to support billions of dollars of illicit activity like cyber crime, tax evasion, extortion, ransomware, illicit drugs and human human trafficking,” Mr Mnuchin said.
Failure to act
Last week, Mr Trump tweeted that he was “not a fan” of cryptocurrencies, and hinted that Facebook might need a banking licence.
Jerome Powell, head of the Federal Reserve, also said last week that Libra raises many serious concerns.
The tech giant, which hoped to launch Libra next year, has said it “anticipated critical feedback” and is keen to have “conversations” with officials and regulators.
In prepared testimony released on Monday ahead of Tuesday’s senate hearing, Mr Marcus said: “The Libra Association, which will manage the [Libra] reserve, has no intention of competing with any sovereign currencies or entering the monetary policy arena.
“Monetary policy is properly the province of central banks,” he said. “Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals.”
Mr Marcus said the US must lead innovation in digital currencies, adding: “If we fail to act, we could soon see a digital currency controlled by others whose values are dramatically different.”