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Bitcoin Regulation and Bitcoin Tax in UK
Although nothing has been put in place as yet regarding bitcoin it seems evident that some form of regulation is being considered by the British government on bitcoin and other digital currencies. Currently we only have reports such as the Treasury Department stating that anti-money laundering regulations will be updated to include bitcoin and other digital currencies. This is likely to follow the European Union’s Fourth Anti-Money Laundering Directive by increasing transparency such as exposing the ownership or benefit of wallets and accounts as a new attempt to curb money laundering (The Fourth Directive was transposed into UK as the Money Laundering Regulations 2017) It is proposed that legislation will be drafted and may come into effect later this year (2018).
The police have reported criminals using crypto currency ATMs (Automatic Teller machines) to launder money and the government is considering, as is Europe, how to formulate and apply regulations relating to tracking the ownership and movement of digital currencies in the UK. This is a space to be watched and it is likely that regulations will eventually be put in place to remove anonymity of ownership as a first step in curbing money laundering in the UK.
Bitcoin expert, Dr Garrick Hileman A research fellow at the University of Cambridge has stated, “I think these announcements have a powerful signalling effect and put the industry on notice that the ‘cop on the beat’ is concerned and watching crypto-currencies more closely now,” he went on, “This in turn will motivate companies to more effectively self-police bad actors.”
At a recent press briefing at Scotland Yard, the press were warned about the currencies’ popularity among criminals. According to Det Supt Nick Stevens, from the Serious and Organised Crime Command, “Organised criminal groups have been early adopters of crypto-currencies to evade traditional money laundering checks and statutory regulations,” “Criminals have also used crypto- currencies to purchase illegal commodities on dark market sites with anonymity.”
However, the Treasury has indicated that there are already “clear tax rules” for legitimate crypto- currency users. “We also intend to update regulation to bring virtual currency exchange platforms into anti-money laundering and counter-terrorist financing regulation,” They stated. Predictably, Bank of England deputy governor Sir Jon Cunliffe is advising people to “do their homework” before participating in bitcoin. “People need to be clear this is not an official currency. No central bank stands behind it, no government stands behind it,” he said in a BBC interview recently.
This is an area to definitely keep up to date on if you reside in the UK or its territories.
This article is for information purposes only and is not to be construed as financial information for any purposes such as investment or speculation and it is the responsibility of the reader to perform proper due diligence before acting upon any of the information provided. We recommend that you consult with a licensed, qualified investment advisor before making any investment decisions.