Bitcoin exchanges in the United Kingdom will soon be regulated by the government, a report released in conjunction with the Chancellor of the Exchequer George Osborne’s 2015 Budget revealed. The government also intends to apply anti-money laundering regulations to Bitcoin and other cryptocurrencies, in a bid to the check the rise of digital currencies-assisted criminal activities while supporting innovation and growth in the revolutionary technology.
The report released by HM Treasury and Andrea Leadsom MP disclosed that the government will launch a formal consultation in the next Parliament session, to be held this year, and will discuss with the digital currency industry on various critical issues, including effective implementation of the proposed regulatory actions and how the law enforcement agencies can more easily identify and curb criminal activities.
HM Treasury had received over 120 responses to its call for information about digital currencies.
The government will also work with British Standards Institution and the cryptocurrency industry to develop “best practice” standards for consumer protection. This is a landmark move on behalf of the government as the Bitcoin industry continues to be plagued by thefts, scams, and attacks.
Chancellor George Osborne has always been a strong proponent of the FinTech revolution. In August last year, he gave a comprehensive speech on working with digital currencies and associated financial technologies. He had then compared the cryptocurrency innovation to the introduction of paper money which completely transformed commerce several hundred years ago.
The government will bring together UK’s Research Councils, Alan Turing Institute, and Digital Catapult with the industry to address the opportunities and challenges for the digital currency technology. The government will pour in an additional £10m in funding in this new initiative. The Bitcoin industry faces a severe lack of funds in several nations such as Germany, which proves to be a major roadblock on the growth path.
In February, the Bank of England had shown strong interest in the blockchain technology – the technology behind Bitcoin – and said that is weighing the pros and cons of a digital currency-backed financial system. The bank is also researching the potential impact of the central bank-issued cryptocurrencies.
Bitcoin transactions take place between a sender and a receiver, without needing third-party verification from a bank or any other financial institution. The technology facilitates reliable international transactions at extremely low costs, and in a matter of seconds. The Bank of England seemed particularly impressed with this aspect of the technology.
The digital currency industry couldn’t be happier with the announcement. Tom Robinson, a board member of UK Digital Currency Association said, “Today’s announcement is significant in that it brings Bitcoin and other block chain technologies closer to mainstream adoption.” The move is also expected to encourage other governments into moving fast with their plans for digital currencies.
The Bitcoin ecosystem has been self-sustaining until now, but with the government’s support, it can witness an unprecedented expansion and hopefully, investors will not lose any money to cyber attacks in the optimistic future.