Treasury efforts are underway to impose controls on crytpocurrencies such as Bitcoin amid concerns they are used to launder money and dodge tax
The Exchequer plans to compel traders to disclose their identities and report suspicious activity. Part of the appeal of cryptocurrencies thus far has been that they allow account holders to do so anonymously. Indeed, Bitcoin’s background is steeped in the dark web, with criminals among the first to use the online currency when it first emerged in 2008.
However, the Treasury now intends to regulate online currencies, which, in the case of Bitcoin alone, has reached a value of £145bn, let alone the huge number of alternatives such as Ethereum, Dash and Litecoin.
The planned legislation would bring the currencies in line with anti-money laundering and counter-terrorism financial legislation.
In November, economic secretary to the Treasury Stephen Barclay said in a written parliamentary answer: ‘The UK government is currently negotiating amendments to the 4th 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/early 2018.’
Bitcoin’s value has risen twelvefold over the course of 2017, starting the year at £720 in January and reaching £8,354 today, 4 December 2017.
In total, there are approximately three million people worldwide trading Bitcoin, according to a University of Cambridge study. There are no statistics for how many of them are based in the UK.
Currently, cryptocurrencies are bought and sold on platforms similar to those which trade in foreign exchanges. Under the government’s plans, wallet providers – which operate much like a bank account – would be obliged to report suspicious transactions and undertake due diligence on customers, meaning wallet holders would no longer remain anonymous.
The Treasury has been approached for comment.
The University of Cambridge's study is available here.
Report by Calum Fuller
