The UK Treasury has announced a plan to include cryptocurrency under the umbrella of the European Union’s anti-money-laundering rules. Historically, the rules have required stock traders to provide information regarding their personal identities and exchanges to disclose any suspicious behavior to the appropriate law enforcement officials.
This push for regulation comes just a week after the United States’ Internal Revenue Service (IRS) commanded the widely-used Coinbase wallet to provide information regarding the personal identities and transactional histories of its customers.
While the United States government’s drive to regulate seems to be mostly motivated by the desire to profit off of taxing gains made by cryptocurrency investment, the UK’s regulatory stance seems to be more focused around the association of Bitcoin and other cryptocurrencies with money laundering, terrorism, and other illegal activities.
Detective Inspector Timothy Court, a member of the Met’s Organised Crime Group, explained:“We are seeing criminals using Bitcoin to buy drugs and firearms on the dark web and also laundering money with it.” According to a report from The Sun, 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.
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While the details of the plan are rather vague, Treasury Minister Stephen Barclay said: “The Government supports the intention behind these amendments. We expect these negotiations to conclude at EU level in late 2017/early 2018.”
Bitcoin’s Shadowy Past
Although Bitcoin’s public associations have stayed more or less within the fintech sphere in recent months, the coin was once famously known as the currency-of-choice on the infamous Silk Road exchange, a platform for buying and selling illegal services and contraband materials. Today, Bitcoin’s capabilities as a semi-anonymous currency make it the currency of choice for some criminals, but other coins with higher levels of anonymity have taken its place.
The UK and the United States are some of the latest countries to join in the worldwide wave of cryptocurrency regulation, a movement that has been spurred by the sudden boom in the value of Bitcoin that has brought the coin past $11,000, a figure that will likely continue to grow.
Although Japan was the first country to legally recognize certain cryptocurrencies as legal tender with its Virtual Currency Act in April of 2017, China is responsible for starting the most recent trend. In September, China abruptly passed a series of sweeping bans that outlawed domestic exchanges and ICOs; Malaysia, the Philippines, India, and Mexico are among others who are in the process of passing legislation that will regulate cryptocurrency.
The UK’s regulatory plans are still so vague that it is hard to say exactly what effect they will have on the cryptocurrency sphere. While the UK is responsible for a rather small portion of the cryptocurrency market, its regulatory decisions will likely have an effect on the regulations that the EU at large decides to adopt. Until more concrete plans are put in place, the world will just have to watch and wait.