Britain has taken a significant step towards becoming a global bitcoin hub as the government announced it would regulate digital currencies for the first time by applying anti-money laundering rules to exchanges.
Already the centre of the US$5-trillion-a-day market for traditional currencies, the UK is fast emerging as a centre for digital currencies, cementing its place as European’s financial technology capital.
In a report published alongside Finance Minister George Osborne’s annual budget statement, Britain’s Treasury said the new regulation would support innovation and prevent criminal use of digital currencies. The proposals will be consulted on early in the next parliament.
Tom Robinson – co-founder of Elliptic, the world’s first bitcoin insurance vault in London, and a board member of the UK Digital Currency Association – said the regulation effectively served as a government stamp of approval.
- “It provides enough oversight to provide legitimacy without stifling innovation,” he said. “I think it is a good balance between on the one hand the US and specifically New York, which I think have gone too far, and what a lot of countries are doing which is just completely ignoring it.”
The potential for digital currencies to be used for illicit financial transactions has led many to steer well clear of them.
The so-called “cryptocurrencies” are also prone to wild swings in value and can be a target for hackers, with Japanese exchange Mt Gox last year filing for bankruptcy after hackers stole an estimated US$650 million worth of customer bitcoins.
But bitcoin’s supporters say it could be revolutionary.
Even the Bank of England has got behind bitcoin, despite last year warning that digital currencies may be at risk of fraud and could damage the economy.
In a discussion paper in February, the bank said digital currencies showed “considerable promise” and that it was possible to transfer value securely without a trusted third party.
Loading...