Facebook's Libra Under Fire? US Treasury Voices Money Laundering Concerns About Proposed Cryptocurrency

Treasury Secretary Steve Mnuchin on Monday expressed his concerns that Facebook's proposed cryptocurrency Libra could be used to facilitate money laundering operations.

Mnuchin warned Facebook that it should take proper measures to safeguard against the currency being used for illicit activity.

"The Treasury has been very clear to Facebook … and other providers of digital services that they must implement the same money-laundering safeguards in countering the financing of terrorism as traditional financial institutions," Mnuchin said in a press conference.

Federal Reserve Chairman Jerome Powell has also criticized Libra and its potential effects on the financial system.

"While the project's sponsors hold out the possibility of public benefits, including improved financial access for consumers, Libra raises many serious concerns regarding privacy, money laundering, consumer protection and financial stability," Powell said on Wednesday. "These are concerns that should be thoroughly and publicly addressed before proceeding."

Libra would be held in a digital wallet known as Calibra. The head of the Calibra project, David Marcus, said that Facebook will not launch the cryptocurrency until it has "fully addressed regulatory concerns."

The Senate will hold a hearing on Libra in August. Sen. Sherrod Brown of Ohio has called the cryptocurrency "risky," citing data privacy concerns.

A Facebook spokesperson said that they "look forward to responding to lawmakers' questions as the process moves forward."

Libra was unveiled in June by Facebook as it aims to "create more access to better, cheaper and open financial services – no matter where you are, where you live and what you do."

Facebook has said that Libra would be beneficial for the developing world and the 1.7 billion people who don't have traditional bank accounts.