Government calls for EU to regulate bitcoin under money laundering rules
Concern grows that the virtual currency is a magnet for criminals.
The UK Treasury wants bitcoin and other cryptocurrencies to be regulated by the European Union’s anti-money laundering rules to defeat its use by criminals.
The increase in regulation would force traders dealing in bitcoin and other digital currencies to disclose their personal identities and report any suspicious activities to police, according to The Sun.
The push for increased regulation comes a week after the United States’ Internal Revenue Service (IRS) ordered the widely used Coinbase wallet to provide information on the personal identities and transactional histories of its customers.
The US government’s drive to regulate seems to be motivated by profit. But the UK’s stance appears to be driven by concerns about cryptocurrencies’ association with money laundering, terrorism and other illegal activities.
“We are seeing criminals using bitcoin to buy drugs and firearms on the dark web and also laundering money with it,” said Detective Inspector Timothy Court, a member of the Met’s Organised Crime Group.
According to one report, the Met “has already seized bitcoin evidence in one money laundering case involving brothels.” Cryptocurrency has reportedly been on the Met’s radar for more than 18 months.
The amendments would bring virtual currency exchange platforms into Anti-Money Laundering and Counter-Terrorist Financing regulation according to Stephen Barclay, economic secretary to Britain’s Treasury, who expects negotiations to be concluded by early next year.
Global concern over the regulation of cryptocurrencies has been sparked by the sudden boom in the value of bitcoin which has surged 1,000% in value this year.
After a hectic fortnight for the digital currency, it broke another record on Sunday to climb to £8,736 according to the Express.
As finance firms begin offering Bitcoin to investors, Duncan Donald, CEO of London Academy of Trading told Express.co.uk that with any financial product or service, regulation should be a necessity not a preference.
“If bitcoin is going to take steps to becoming a mainstream monetary solution, then ensuring standard due diligence is adhered to by all participants is a prerequisite,” he said.
Benjamin Dives, CEO of London Block Exchange backed the Treasury’s plans and said it was now time for cryptocurrencies to “grow up”.
“Cryptocurrency fundamentally challenges the traditional institutions that have managed money for centuries,” he said. “This is exactly what makes it so special, but doesn’t mean that it shouldn’t be regulated.”
Robert Edwards, CEO of Bond told Express.co.uk that regulations would be seen as a good or a bad thing, depending on your perspective.
“The anonymity of cryptocurrencies is a big part of their popularity, Edwards says. “Some early investors have made very healthy returns, without having to identify themselves, which for many investors is seen as a positive.
“Regulations were brought into the financial markets to protect investors interests for the long term. If cryptocurrencies’ reputation is to remain positive over a long-term, some form of governance will be needed to safeguard investors.”