- The UK and other EU governments plan to regulate cryptocurrencies, including bitcoin, amid concerns they are being used for money laundering.
- New legislation will bring cryptocurrencies in line with anti-money laundering and counter terrorist financing legislation by increasing transparency.
- The new legislation is expected to come into effect next year.
LONDON – The UK government is planning to crack down on bitcoin as concerns grow that cryptocurrencies are being used to facilitate financial crimes and launder money.
The Treasury is planning new legislation that will mean anti-money laundering and counter terrorist financing rules apply to cryptocurrency in future, according to reports in the Guardian and the Telegraph.
It will include rules forcing traders to reveal their identities in some circumstances. Under an EU-wide plan, online platforms where currencies are traded will be made to carry out due diligence on buyers.
In November, economic secretary to the Treasury Stephen Barclay said in a written parliamentary answer: “The UK government is currently negotiating amendments to the fourth anti-money laundering directive that will bring virtual currency exchange platforms and custodian wallet providers into anti-money laundering and counterterrorist financing regulation, which will result in these firms’ activities being overseen by national competent authorities for these areas.”
He said the government “supports the intention behind these amendments,” and negotiations are expected to conclude at EU level in late 2017 or early 2018.
A Treasury spokesperson said in an emailed statement, “We are working to address concerns about the use of cryptocurrencies, by negotiating to brig virtual currency exchange platforms and some wallet providers within anti money laundering and counter terrorist financing regulation.”
Nicholas Gregory, CEO of CommerceBlock, said in an email to Business Insider: “What some will bill as censure, the cryptocurrency community will deem as a stamp of approval that finally recognises the pivotal role that digital currencies will ultimately hold for the global economy.
“Industry players want the same thing as politicians – cryptocurrencies that offer cheap, frictionless, international transactions used for legal purposes. If anything, regulation will only increase bitcoin’s rate of growth as regulation lends credibility and engenders trust.”
The planned rule changes come as the London’s Metropolitan Police warned this week drug dealers are using cryptocurrency ATMs to stash the proceeds of crime. Even small-time dealers are embracing currencies like bitcoin, litecoin, and ethereum as a way of banking drug money without getting caught, the police said.
The Serious and Organised Crime Command said the number of cases involving cryptocurrencies has gone from “zero” at the start of 2016 to several dozen today, and they believe this number will increase.
Bitcoin hit a new high of $11,826.76 per coin on Sunday, surpassing its previous high of $11,300. The currency is subject to continued interest from ordinary investors as well as those working in financial services. Last week it emerged that exchange operator Nasdaq could follow rival CME Group in launching bitcoin future contracts next year.