The British government is planning to introduce strict regulations of cryptocurrencies like bitcoin to combat crime like tax evasion and money laundering.
The UK Treasury will lead the effort into regulating cryptocurrencies like bitcoin, bringing it under the purview of anti-money laundering and counter-terrorism financing legislation.
A Treasury spokesperson said on Monday:
We have clear tax rules for people who use cryptocurrencies, and like all tax rules, these are kept under review. We also intend to update regulation to bring virtual currency exchange platforms into anti-money laundering and counter-terrorist financing regulation.
The remarks were quickly publicized on mainstream media as a ‘crackdown’ on cryptocurrencies, whereas the truth is closer to the expected course of regulatory acceptance of decentralized cryptocurrencies by ensuring trading platforms play by regulators’ rules.
Further, the Treasury’s intent to regulate cryptocurrencies comes amid reports of drug dealers in London allegedly laundering cash at bitcoin ATMs in the city. “If you’re a local drug dealer [cryptocurrency ATMs] are a great opportunity to quickly dispose of cash,” said Detective Inspector Tim Court of the London Metropolitan Police.
“The reason for bitcoin being created was genuine, was honest,” stated Detective chief inspector Gary Miles, head of London Met Police’s counter-fraud operation. “But it would appear to have been hijacked and exploited by some people in the criminal underworld.”
The plan to introduce regulations for bitcoin was first revealed by the economic secretary to the Treasury Stephen Barclay in late October this year. Speaking in the UK Parliament, Barclay was responding to a question about the Treasury Department’s intent to regulate cryptocurrencies.
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.
Her Majesty's Treasury image from Shutterstock.