UK and EU Plan to Regulate Bitcoin as Concern for Crime Grows
The Treasury announced Monday that under a new EU-wide plan to launch next year, they will apply anti-money laundering and counter terrorist laws to all cryptocurrency, especially Bitcoin. Concerns that the cryptocurrency is being used in tax evasion, money laundering, and other financial crimes have led legislators to propose strict regulations.
Cryptocurrencies, otherwise known as digital currency, are lines of computer code that hold monetary values. They are created by electricity and high-performance computers, known as “miners.” Essentially, it is a form of digital public money where lines of code are sent out for purchases.
Bitcoin was invented in 2009 and was the first cryptocoin currency ever made, although no one knows its creator. All digital currencies created since the inception of Bitcoins are known as Altcoins or alternative coins. Altcoins include Litecoin, Peercoin, Feathercoin, Ethereum, etc.
Traders can maintain their anonymity during transactions with Bitcoins, making this internet currency attractive for drug dealings and illegal activities. The new legislation will mean that traders now must reveal their identities to customers, and all activities will be overseen and regulated by national authorities. Additionally, online platforms where Bitcoins are traded will be required to carry out due diligence on customers and report suspicious transactions.
Economic Secretary to the Treasury, Stephen Barclay, commented: “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.”
The planned changes come after the London Metropolitan Police found that drug dealers are using cryptocurrency ATMs to stash their proceeds.
This past Sunday, Bitcoin reached a new high of $11,826.76 for one Bitcoin, surpassing its previous high of $11,300. Ironically, it is because of the aforementioned illegal uses of Bitcoins that has allowed the value of the digital currency to skyrocket.
However, its growing value has attracted major exchange operators like Nasdaq and their rival, CME Group, since the currency is subject to interest from ordinary investors. Last week, both companies revealed their plan to launch Bitcoin future contracts in 2018, demonstrating the rapidly growing popularity of this new form of currency.