Justin Muzinich, the deputy secretary of the U.S. Treasury, has raised the specter of a not-so-distant future when private digital currencies have stripped some of the power from governments when it comes to monetary policy.

In a keynote address at The Clearing House + Bank Policy Institute Annual Conference in New York on Thursday, Muzinich gave an over view of the Treasury’s current priorities, from regulatory and tax reform to economic policy and national security.

He also devoted a good third of his talk to the digital currency space and the growing trend for financial intermediation by non-bank companies.

Cryptocurrency projects, said Treasury Secretary Steven Mnuchin’s number two, “not only have implications for private business, but also for a number of activities the government is responsible for. “

There are a number of potential threats from the rise of the technology, he said, including to national security, the monetary base, financial stability and consumer protections and privacy.

The Treasury has concerns that digital currencies “can potentially be used to evade existing legal frameworks – like those governing taxation, anti-money laundering, and countering the financing of terrorism,” Muzinich said. While the treasury has set out that U.S. laws must be obeyed, regardless of whether a transaction is made with fiat or digital currency, should an anonymous cryptocurrency grow to scale it would make it harder to enforce those laws.

Even if crypto projects comply with all anti-money laundering rules, there’s still a threat to financial stability and user protection, but looming above all that, a “longer-term concern,” is the issue of governance, said Muzinich.

While he didn’t mention it specifically, the Facebook-led Libra project would seem to have raised the issue foremost in the Treasury’s thinking. The project – a stablecoin pegged to fiat currencies that would be made available to Facebook’s billions of users and beyond – has been widely criticized by regulators worldwide over its perceived threat to financial stability, national monetary sovereignty and crime management.

Raising the history of the U.S. monetary system, Muzinich continued to say that in the 1830s, 90 percent of money circulating was from private entities. “The U.S. enacted laws to charter national banks to create a uniform currency; a central bank to provide a flexible and stable monetary system: and federal deposit insurance. Together these form key foundations of our financial system,” he said.

Cryptocurrency, therefore, raises questions under this system. If one grew to be used on a large scale, who would make the big decisions on any important changes? What if a majority of the cryptocurrency was owned outside the U.S.?

“In any case, would important decisions about our economic system have been taken out of the hands of representatives accountable to the people?” he further asked.

Private cryptocurrencies are not just about payments, according to Muzinich, but may move “some functions traditionally performed by government to the private sector.”