UK Treasury Wants to Regulate Bitcoin Against Money Laundering and Terrorism

The UK's Treasury hopes to tackle Bitcoin's anonymity to help in the fight against money laundering and terrorism.

Bitcoin’s ecosystem, as far as government institutions are concerned, has become a bit of a nuisance when it comes to the legality of things its holders do with the cryptocurrency.

Since it’s mostly an anonymous form of payment, it’s very difficult to get information about the people involved in a transaction and what activities they carry out.

The UK’s Treasury wants to regulate cryptocurrencies further so that they may combat both money laundering and the financing of terrorism.

“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 into anti-money laundering and counter-terrorist financing regulation,” said a spokesperson for the Treasury.

It’s likely that the government institution will follow the lead of the European Union, having exchanges perform due diligence on their customers and report illegal activities through proper channels.

This won’t necessarily remove all of the anonymity that Bitcoin is known for, but some of it will be stripped for average UK citizens who want to purchase the cryptocurrency conveniently.

For criminals, acquiring Bitcoin or selling it will now simply be a matter of hopping onto another exchange where these regulations do not apply, or using services like Localbitcoins.

As far as the rest of Europe is concerned, EU authorities also have concerns about Bitcoin being used to finance terrorism and money laundering operations.

However, politicians within the Union do not all agree on this. German MP Frank Schaeffer said that a free country should “not intervene in citizens’ private choice of money.”

Banks, on the other hand, are concerned about the speculative nature of the currency. At the beginning of October, UBS chairman Axel Weber said that Bitcoin’s rise is “worse than tulip bulbs.”

However, the UK Treasury seems more interested in stamping out crime than it is in banning Bitcoin outright. This might play well for the country’s government, as the cryptocurrency won’t be forced further underground, making it even more difficult to regulate commerce.