The UK government plans to bring cryptocurrency exchanges into existing anti-money laundering and counter-terrorism legislation. The rules are expected to come into force throughout the EU later this year or early next.
A UK Treasury spokesman said:
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 and some wallet providers within anti-money laundering and counter-terrorist financing regulation.”
Under the proposed changes exchanges will have to report to authorities any suspicious transactions and conduct appropriate due diligence on their customers. The biggest change will be loss of anonymity for bitcoin traders.
Bitcoin and Money Laundering
Undoubtedly the anonymous nature of Bitcoin transactions has added to their popularity, being used on the dark web to pay for products and services which fall outside of the law. Recently the London Metropolitan Police raised new concerns that Bitcoin ATMs in the capital were being used to launder drug money. Head of the Serious and Organised Crime Command (SOC) Michael Gallacher said that drug deals were increasingly taking place near the ATMs, as, “if you move large quantities of cash around it leaves you vulnerable to other criminals”.
Cryptocurrencies Enter The Mainstream
Some see the Treasury’s proposals not as a “crackdown” but as cryptocurrencies being brought into the financial mainstream. Labour MP and member of the House of Commons Treasury select committee John Mann suggested that regulation was needed now, not just to make combat criminality but to ensure that the UK was ready for wider adoption of cryptocurrencies:
It may be that we want 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.”
Nicholas Gregory, CEO of CommerceBlock told Business Insider that the the cryptocurrency community would see this as “a stamp of approval that finally recognises the pivotal role that digital currencies will ultimately hold for the global economy.” Greater regulation could lead to more credibility and increasing adoption.
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