The new rules could come into effect by the end of 2017 or early 2018.
Cryptocurrency investors have been riding high on Bitcoin’s wild rise – but the virtual asset could come under stricter regulation in Britain within months.
HM Treasury may force cryptocurrency dealers to reveal their identities and be duty-bound to report suspicious behaviour. It is hoped the regulations will challenge money-laundering and terror funding over the decentralized financial network.
The regulation plans would draw upon EU legislation to permit investigation of individual traders by government institutions.
Economic secretary to Britain’s Treasury Stephen Barclay told Parliament in early November of amendments which would “bring virtual currency exchange platforms and custodian wallet providers into Anti-Money Laundering and Counter-Terrorist Financing regulation.”
Bitcoin’s value has rocketed by more than 1000% since the start of this year — a trajectory studded with regular drops in price, prompting mistrust from many financial leaders. J.P. Morgan CEO Jamie Dimon branded the unregulated digital asset as a “fraud”, calling its investors “stupid”.
This past week, bitcoin fluctuated erratically, shedding $2,000 of its price on Thursday shortly after breaking through the $11,000 barrier hours earlier. The unpredictable cryptocurrency hit an all-time high of $11,723 at 3pm on Sunday and fell sharply by $500 later that evening, according to currency tracker Coindesk.
Cryptocurrencies are new ground for financial and business markets, with bitcoin quietly released by the pseudonymous Nakamoto in 2009. Bitcoin’s popularity – even notoriety – is such that virtual trading platforms occasionally suffer outages, unable to process huge volumes of traffic generated.
The proposed legislative changes would bring digital-currency marketplaces under the scrutiny of British government bodies, Mr Barclay said. The new rules could come into effect by the end of 2017 or early 2018. A Treasury select committee enquiry into the need for better regulation of cryptocurrencies is expected next year.
A Treasury spokesperson said on Monday: “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.”
Australia has also announced similar measures, whereas a few nations – including Bangladesh and Ecuador – have banned the currencies altogether.
In a bid to keep up with emergence of new technologies, the government is also considering a mandatory safety test for all UK drone pilots, as well as imposing no-fly zones around airports and prisons.