Washington's main concern about the rise of cryptocurrencies is to make sure they are not used for illicit activity, US Treasury Secretary Steven Mnuchin says as he urges nations to join the United States in regulating them.
"My number-one focus on cryptocurrencies, whether that be digital currencies or bitcoin or other things, is that we want to make sure that they're not used for illicit activities," he told the World Economic Forum in Davos, Switzerland on Thursday.
"We encourage fintech and we encourage innovation, but we want to make sure all of our financial markets are safe," Mnuchin said. "We want to make sure that the rest of the world -- and many of the (Group of) 20 countries are already starting on this -- have the same regulations."
US-based platforms for bitcoin and other virtual currencies must comply with anti-money laundering rules, with around 100 such platforms registered with the US Treasury's Financial Crimes Enforcement Network.
Bitcoin soared more than 1,700 per cent last year to a record high, raising fears that the volatile emerging asset poses a risk to investors and the global financial system.
Regulators have also warned of risks that criminals may use the virtual currencies to store and transmit their ill-gotten gains, because they can be used anonymously.
Several countries including South Korea and China have tried to slow trading of cryptocurrencies, and fears of a wider clampdown pushed bitcoin down nearly 20 per cent last week.
Policymakers around the world are debating how to deal with the volatility of cryptocurrencies. A senior Bank of Japan official said on Thursday that imposing global, across-the-board regulations on their trading won't be easy.
Christine Lagarde, head of the International Monetary Fund, said countries should take into account both the risks and benefits associated with the development of the cryptocurrencies in deciding whether and how to regulate the market.
Larry Fink, chief executive of BlackRock Inc, the world's biggest asset manager, told the forum that cryptocurrencies posed a systemic threat that needed to be dealt with globally.
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