UK/EU plan crackdown on Bitcoin amidst fears of crime and tax evasion

The Treasury plans to regulate the currency, as well as other cryptocurrencies, to bring them in line with counter-terrorism financial legislation and anti-money laundering

UK and other EU governments are planning on a crackdown on bitcoin, amid concerns that the digital currency is being used for tax evasion and money laundering.

The Treasury plans to regulate the currency, as well as other cryptocurrencies, to bring them in line with counter-terrorism financial legislation and anti-money laundering.

Traders will be forced to disclose their identities, ending the anonymity that made the currency attractive to many, especially those involved in illegal activities.

Under the EU-wide plan, online platforms, where bitcoins are traded, will be required to carry out due diligence on customers and report suspicious transactions.

Such regulations are expected to come into effect next year.

CEOs of Goldman Sachs and JP Morgan criticized bitcoin as a vehicle to commit fraud and other crimes.

However, others such as Sir Jon Cunliffe, said the digital currency was too small to pose an actual systemic threat to the global economy. He also cautioned that investors needed to “do their homework.

On Monday, Bitcoin was trading at $11,566. It hit a record high of $11,800 on Sunday but then fell to $10,554, upon the release of the regulatory crackdown.

Labour MP John Mann, also a member of the House of Commons Treasury select committee, suggested that MPs would look into the regulation of virtual currencies.

He said: “these new forms of exchange are expanding rapidly and we’ve got to make sure we don’t get left behind – that’s particularly important in terms of money laundering, terrorism and pure theft.

“It would be timely to have a proper look at what this means. It may be that we want to speed up our use of these kinds of things in this country, but that makes it all the more important that we don’t have a regulatory lag.”

Economic secretary to the Treasury, Stephen Barclay, set out the government’s plan in a written parliamentary reply back in October.

“The UK government is currently negotiating amendments to the 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 or early 2018.”