EUROPEAN GOVERNMENTS have unveiled plans to crack down on Bitcoin amid concerns that the cryptocurrency is being used by criminals.
According to a report in the Guardian, European governments are fearful that crooks are using bitcoin to avoid paying tax and to launder money.
In the UK, the Treasury is to implement new regulations to ensure that Bitcoin and other cryptocurrencies are in line with existing anti-laundering and financial laws.
This means that, when using the currency, traders will need to provide the government with information on their identities and other details about the way they use the currency.
Bitcoin is lucrative for criminals and crime organisations because there isn't a central regulation system, and traders can use the currency without an identity.
Although the UK government has announced its own plans, these steps will take place alongside an EU-wide initiative to ensure Bitcoin is regulated properly.
Online platforms that use the cryptocurrency will need to analyse and monitor customers to ensure legal use. And if suspicious transactions are tracked, they'll have to alert the appropriate authorities.
The rules are set to come into effect next year, and they come at a lucrative time for the currency. Just last week, it surpassed the $10,000 trading mark.
Bitcoin has come under increased criticism from the financial sector in recent times. Firms such as Goldman Sachs and JP Morgan have already branded it as a catalyst for fraud.
However, the Guardian claims that Sr Jon Cunliffe - who is a deputy governor at the Bank of England - thinks the digital currency is "too small" to have a detrimental effect on the world's economy.
Labour MP John Mann, also a member of the House of Commons Treasury select committee, has previously said his colleagues will explore potential virtual currency regulations.
He told the Daily Telegraph: "These new forms of exchange are expanding rapidly and we've got to make sure we don't get left behind - that's particularly important in terms of money laundering, terrorism or pure theft.
"It would be timely to have a proper look at what this means. It may be that we want speed up our use of these kinds of thing in this country, but that makes it all the more important that we don't have a regulatory lag." µ
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