Bitcoin in the Treasury's scope: is it prepared for regulation?

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For the past few years the website 99Bitcoins has been collating bitcoin’s many obituaries. Turns out, according to the media at least, bitcoin has ‘died’ 200 times (and counting).

Throughout its tumultuous existence bitcoin has fluctuated wildly, but always exhibited a tremendous staying power. And despite its numerous reported deaths, it reached new heights when it recently shattered the $10,000 barrier.

It seems the new surge in its value has sparked a new round of anxiety. The Nobel winning economist Joseph Stiglitz told Bloomberg the currency should “outlawed” as its existence was entirely predicated on skirting regulation.

A day earlier at a conference in Vilnius, another Nobel laureate Robert Shiller predicted the crypto bubble was fixing to burst. Coming from Shiller, the doyen of correctly predicting economic crashes, the statement might inspire nervousness.

AML and counter-terrorism rules

British authorities have also finally taken notice of bitcoin, too. The Treasury has announced it intends to bring the currency in line with AML rules and counter-terrorism financial legislation.

The Treasury’s plans form part of an EU-wide strategy. Online platforms where bitcoins are traded will be required to carry out due diligence on customers and report suspicious transactions.

A Treasury spokesperson told AccountingWEB: “We are working to address concerns about the use of cryptocurrencies by negotiating to bring virtual currency exchange platforms and some wallet providers within anti-money laundering and counter-terrorist financing regulation.”

Stephen Barclay, the economic secretary to the Treasury, explained in more detail that the Treasury’s plans “will result in these firms’ activities being overseen by national competent authorities for these areas”.

The negotiations are expected to conclude at EU level in late 2017/early 2018.

Regulation ‘a form of acknowledgement’

The announcement has been characterised elsewhere as a crackdown. But according to Nicholas Gregory, CEO of CommerceBlock, “regulation is a form of acknowledgement”. CommerceBlock is a FinTech business operating in the blockchain/bitcoin space.

“As someone who is a fan of bitcoin and wants to see the technology proceed, I’m not anti-regulation. The more people acknowledge it, the more we’ll see mainstream adoption,” Gregory said. He is dubious, however, about what he sees as fanciful headlines about bitcoin-enabled money laundering.

When asked about bitcoin’s role in criminal activity, a Treasury spokesperson said that while they are aware digital currencies can be used to enable and facilitate cybercrime, “There is little current evidence of them being used to launder money”.

“Though this risk is expected to grow,” the spokesperson added, “that is why these regulations will help”.

CommerceBlock’s Gregory is positive about where bitcoin is heading. “You can’t kill it. It’s decentralised. There’s no one to jail. You’d have to take out every computer in the world to kill it. Bitcoin is like gold except it's more usable.

“I don’t know if it’ll be used in everyday commerce. But as a layer above gold, as an international reserve currency, it’s heading there if it’s not there already. Outside of gold and maybe oil, it seems to be the only currency that’s universal.”

About Francois Badenhorst

Francois

I'm AccountingWEB's business editor. Feel free to get in touch with comments, tips, scoops or irreverent banter. 

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