Stock Groups

Jared Kushner is a bitcoin and crypto fan, Mnuchin emails show

[ad_1]

Steven Mnuchin, U.S. Treasury Secretary, is left, U.S. president Donald Trump, Jared Kushner, senior White House advisor, listens during a bilateral meeting with SaadHariri, Lebanon’s prime minister, which was not photographed at the White House, Washington, D.C.

Zach Gibson | Bloomberg | Getty Images

Recent documents reveal that a former president Donald Trump’s trusted senior advisor was pushing the White House for crypto before crypto markets skyrocketed.

In 2019, when crypto was in the midst of a multi-year bear market, Jared Kushner — a senior adviser and Trump’s son-in-law — was quietly advocating for a U.S. digital dollar, in which the Fed would launch its own central bank digital currency. The 250-page document containing Secretary Steven Mnuchin’s crypto-related correspondence, which was dated from four years of Treasury service, shows this. was obtained by CoinDeskRequest under the Freedom of Information Act (FOIA).

Additional insights include information about the battle between Mnuchin and the crypto lobby over Treasury’s final-minute effort to roll out new rules regarding user-controlled digital wallets.

CNBC asked Mnuchin and Kushner for their comments on crypto-related email swaps.

Kushner endorses the digital dollar

Kushner (more well-known for his foreign policy work than fiscal issues) sent Mnuchin an email on May 29, 2019 to propose that a group be formed to discuss the possibility of U.S. digital currencies.

It also included a hyperlink to a blog post by OpenAI CEO Sam AltmanAltman states that, while it cannot prevent cryptocurrency from being created by the U.S. government, the U.S. can make sure they do so. Altman then riffs about a hypothetical U.S. Digital Currency, or USDC. This would be a legal second currency. The U.S. could be considered the “first superpower nation to establish a CBDC” which would give it an “enviable place in the future of world affairs and some power over global currencies.

Kushner expressed concern about the proposal, writing that “my sense is it could make sense” and could also lead to changes in the payment of entitlements.

Mnuchin has not replied to the request. It is therefore unclear if Treasury Secretary took his advice.

Kushner’s view on CBDC proved to be prescient.

While few countries had been seriously exploring national digital currencies by mid-2019 there were at least 87 countries that represent more than 90% of the global GDP. according to research from the Atlantic Council.

China’s digital yuan is far more advanced than the rest. China spent decades developing it and testing it. Beijing is currently accelerating efforts to expand the so-called eCNY (electronic currency note) to a larger population. ultimate goal of replacing the cash and coins already in circulation. Kushner first floated the idea for a digital dollars in 2005. Legislators and regulators have also been discussing a CBDC, but with far less tangible progress towards its implementation.

During a two-day congressional hearing in JulyJerome Powell, Federal Reserve Chair said that the primary incentive for America to establish its own CBDC was to end the American use of crypto coins.

Powell explained that you would not need to have stablecoins and you wouldn’t require cryptocurrencies if you had digital U.S. currencies. Powell said, “I believe this’s one the strongest arguments in favor of it.”

The reality is that America’s CBDC take would be just a digital version of the U.S. Dollar: Completely regulated under one central authority and supported by the entire faith of its central bank.

The central bank is responsible for any dollar that you deposit in CBDC forms. Ronit Ghose is the head of FinTech and digital assets at Citi Global Insights.

Chris Giancarlo was the former chairman of Commodity Futures Trading Commission. since taken up the cause for a digital dollarHowever, the Fed is yet to provide sufficient support for the project’s scale. Powell told Capitol Hill lawmakers that he isn’t certain whether digital dollars are worth the risks.

Giancarlo was the first to spearhead the Digital Dollar Project. The former Chairman of the CFTC was also one of the crypto-progressive voices that Secretary Mnuchin heard before Giancarlo.

A July 2018 e-mail exchange shows that Giancarlo via his executive assistant was determined to set up a time for a face-to-face meeting with Treasury Secretary.

CNBC asked Giancarlo to comment on the White House meeting. He said he didn’t remember the request but that throughout 2018 he had “routinely advised Secretary Mnuchin about ongoing operation and supervision for the Bitcoin Futures exchange launched by CFTC oversight, December 2017.   

CNBC also heard Giancarlo tell CNBC that he believed Secretary Mnuchin was telling him about growing worries surrounding an “Hard Brexit”.

During a hearing at the Congressional Oversight Commission, on December 10, 2020 in Washington DC on Capitol Hill, Steven Mnuchin, US Secretary of Treasury testified.

AFP | AFP | Getty Images

Mnuchin’s office also expressed interest in crypto plans from other countries.

Mnuchin’s staff seemed especially interested in Venezuelan’s September 2019 announcement of using cryptocurrencies to allow for free international and national payments. This move may have allowed the Venezuelan government to bypass U.S. sanctions that had effectively isolated it from the world economy.

Monica Crowley was then Treasury’s Assistant Secretary for Public Affairs. She sent Mnuchin a Bloomberg News headline that said, “Maduro: Venezuela will activate crypto payment methods’soon’.” To which Mnuchin replied, “Let us discuss.”

Crypto rules that are more strict

Mnuchin was rumored to have argued with blockchain advocates over the proposal to create new rules regarding user-hosted crypto wallets in his final months at Treasury.

The privacy concerns and difficulty in meeting compliance regulations were part of the issue. Crypto exchanges would need to gather counter-party information such as addresses from people who want to send and receive crypto using a self-hosted wallet.

Also, the timing of everything was rushed.

FinCEN was formed by the Financial Crimes Enforcement Network (or FinCEN) and proposed the rule about a week prior to Christmas 2020. This came after Joe Biden was elected president. However, he had not yet taken office. Although this deadline was extendedMultiple times, FinCEN offered a 15-day window for public comments on its proposal. Comment periods typically run between 30 and 60 days.

Blockchain Association reached out to Secretary Mnuchin one month before formalization of its proposal. They sought legal counsel. Kirkland & Ellis lawyer Paul Clement wrote a letter to Mnuchin on the Association’s behalf noting that “the notion that stakeholders could meaningfully engage with a rule that touches on more than 24 separate subjects in such a highly truncated period would be doubtful even in the ordinary course.”

Clement warned that “Thus, even a report requirement might be de facto a ban”.

Mnuchin wasn’t the only group that urged Mnuchin not to change his crypto rules. Others suggested that he drop the counter-party disclosure obligation, as Correspondence reveals. The proposal was ultimately rejected.

[ad_2]