Bitcoin is flying high with the original cryptocurrency soaring in value. It’s close to an all time high and the Treasury’s plans to crackdown on the anonymity surrounding trading hasn’t yet slowed it down.
Some EU governments and the UK government are planning to regulate bitcoin and the way cryptocurrency is traded. There are increasing worries that the cryptocurrency is being used for fraud, tax evasion and money laundering – and in its current form it’s impossible to track.
Regulation plans
The UK Treasury has announced plans to regulate bitcoin (and other cryptocurrencies) to effectively move them in line with counter terrorism and anti-money laundering financial legislation.
This will mean ending the anonymity surrounding the trade in cryptocurrency, which is a huge draw for illegal users. Traders will have to disclose their identity and comply with regulations, changing the way the currency works entirely.
Customer due diligence
The plan will go across the entirety of the EU and will mean bitcoin trading platforms will have to carry out customer due diligence and report anything suspicious. The UK government is currently devising and negotiating changes to the anti-money laundering directive, which will bring firms transactional activities concerning cryptocurrencies under national authority regulation.
The Treasury has expressed concern that bitcoin and other cryptocurrencies could be used to allow cybercrime. While the current evidence for bitcoin laundering money is negligible, this is also expected to increase and become a problem.
A spokesman said: “We are working to address concerns about the use of cryptocurrencies by negotiating to bring virtual currency exchange platforms and some wallet providers within anti-money laundering and counter-terrorist financing regulation.”
Mixed analysis
Both Goldman Sachs and JP Morgan have released statements criticising bitcoin as a facilitator for fraud and other crimes. However, the deputy governor of the Bank of England has said that ‘digital currency was too small’ to constitute a real problem to the global economy.
He also placed emphasis on the responsibilities of the investors themselves, saying that they need “to do their homework”
Bitcoin recently hit a high of $11,800 (£8771.65), although as the news broke of the planned changes to regulations it fell to $10,554 (£7845.42).
Government interest
A member of the House of Commons Treasury select committee, MP John Mann, has said that MPs should examine regulating virtual currencies. He said: “These new forms of exchange are expanding rapidly, and we’ve got to make sure we don’t get left behind – that’s particularly important in terms of money laundering, terrorism or pure theft.
“It would be timely to have a proper look at what this means. It may be that we want to speed up our use of these kinds of thing in this country, but that makes it all the more important that we don’t have a regulatory lag.”
The government’s plans were laid out in October 2017, saying: “The UK government is currently negotiating amendments to the anti-money-laundering directive that will bring virtual currency exchange platforms and custodian wallet providers into anti-money laundering and counter-terrorist financing regulation, which will result in these firms’ activities being overseen by national competent authorities for these areas.
“The government supports the intention behind these amendments. We expect these negotiations to conclude at EU level in late 2017 or early 2018.”
