Budget 2015: UK To Regulate Cryptocurrencies

WIRED UK:  The government has announced its intention to apply anti-money laundering regulation to digital currency exchanges in the UK. It is hoped that regulation will not only prevent criminal use of digital currencies, such as Bitcoin, but support innovation. Regulation would be intended to ensure the environment was ready to allow digital currencies to flourish, while at the same time discouraging those who wanted to use digital currencies for illicit reasons.

Ideally the environment would allow for the fast, efficient and secure transfer of ownership of anything of value over the internet. It could guarantee that a secure and permanent record is made of what had taken place, without the need for a third party to oversee the process.

The announcement was made in a document titled Banking for the 21st Century released with the 2015 Budget. Also announced was a £10m research initiative that will bring together the Alan Turing Institute and Digital Catapult councils to address opportunities and challenges for digital currency.

“Digital currency technology makes it possible to transfer the ownership of anything of value over the internet quickly, efficiently and securely,” said Universities, Science and Cities Minister Greg Clark. “This new £10 million research initiative gives the UK an excellent opportunity to become the world leader in developing the potential benefits of this technology, and the uses it could have in the wider economy.”

The government has also committed to working with the British Standards Institution and the digital currency industry to develop voluntary standards for consumer protection. The hope is that the technology can be adopted by banks and non-banking providers in order that they will be able to compete in the market, either by introducing new products, or by delivering existing products more efficiently. The Bank of England has already stated its intentions to undertake its own research into a central bank-run digital currency system.

According to the document, the government wants to put the UK “at the forefront of the development of digital currencies” in order to “make it the location of choice for digital currency and related tech firms”. Bitcoin-based company CoinJar is namechecked as an example of the kind of talent the UK has already attracted in this field. The hope is that consumers and the wider economy will benefit as a result of more digital currencies being based in the UK.