As you all know, United Kingdom recently released a treasury report that explained plans for regulating bitcoin and other cryptocurrency based businesses by bringing in Anti-money Laundering (AML) regulations. This report received mixed response from the bitcoin startup community across the country.
The Her Majesty’s Treasury report – Digital currencies: response to the call for information is a comprehensive report created after due consultation with 120 respondents. These 120 respondents viz. digital currency using public, developers, businesses involved in digital and cryptocurrency services, academics, banks, government agencies and payment scheme companies make up all the stakeholders in the working of the nation and digital currency economy alike. The contents of the final report and its recommendations are worth appreciating as the treasury department has addressed most of the genuine concern aired by all the stakeholders. We can categorize this report as a forward-looking one that sets precedence for a healthy development of both the digital economy and digital currency startups/companies alike.
Even though the implementation of all regulations recommended by the report is still subject to debate at the parliament, but not much is expected to change.
We will discuss few of the recommendations and the reactions they garnered from bitcoin startup community.
According to the report, the AML regulations will require all digital currency exchanges to perform strict background check on all their customers and the transactions that happen though them. Even though it seems reasonable for exchanges dealing with money, but crypto-to-crypto exchanges could have been left out of the strict AML regulations. The crypto-to-crypto exchanges are also voicing the same opinion.
Cryptocurrency transactions are known for decentralization and anonymity. It has become a perfect tool for making anonymous transactions, cross border and otherwise. With the allegations of cryptocurrency being used to fund terror agencies, tax evasion and other illegal activities with a potential to cause worldwide repercussions and loss to the exchequer, it is high time some kind of regulation is put in place to keep a check on it. The new AML regulations proposed by UK Treasury promises to do just that.
On the positive front, developers and startups that do not hold customers’ funds are not required to comply with regulations. This will allow unhindered development of digital currency and digital currency based services. All the digital currency startups seem to be satisfied with it. The clear demarcation between exchanges and other bitcoin business in the report is appreciated.
UK Treasury report urges for a voluntary set of standards for cryptocurrency to prevent crime and protect customer interest for cryptocurrency storage services providers. This recommendation is not likely to affect many companies as most of the companies in this line of business are already following a set of guidelines close to the one suggested.
All these recommendations seem to be in line with making Britain a global bitcoin hub, but until the framework and regulations are finalized by the parliament, one can’t be certain.