UK government plans regulations for virtual currencies

 In News

The U.K. government announced on March 18 that it plans to regulate virtual currencies to prevent money laundering. Once the new government is installed after the May 7 U.K. general election, it will hold a formal consultation on the details of the proposed regulations.

The consultation will seek views and evidence on key questions including how anti-money laundering regulation should be applied to the digital currencies sector, the scope of the regulatory perimeter and the identity of the regulator.

The UK government says in a report published by the Treasury that it wants to support innovation in virtual currencies while simultaneously preventing criminal misuse. Tom Robinson, co-founder of London-based bitcoin insurance vault Elliptic, said in an interview with Reuters that he views this latest development as a “stamp of approval” from the UK government.

Despite the various scandals associated with bitcoin exchanges and bitcoin value fluctuations, the U.K. government says it believes that “digital currencies, when used legitimately, offer an innovative, alternative payment option, which competes with existing payment models and has particularly clear short-term advantages for micro-payments, overseas remittances and cross-border trade.”

In addition to proposing virtual currency regulation, the UK government plans to provide £10 million ($14.9 million) to support research into digital currency technology, and will work with BSI (British Standards Institution) and the digital currency industry to develop voluntary standards for consumer protection.

The Treasury’s report on virtual currencies can be downloaded here.

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