Yesterday’s Budget included an announcement (at paragraph 2.215) that the government:
- Intends “to apply anti-money laudering [sic] regulation to digital currency exchanges in the UK, to support innovation and prevent criminal use”;
- Is “launching a new research initiative which will bring together the research councils, Alan Turing Institute and Digital Catapult with industry in order to address the research opportunities and challenges for digital currency technology, and will increase research funding in this area by £10 million”; and
- “Will work with the British Standards Institution and the digital currency industry to develop voluntary standards for consumer protection“.
HM Treasury published its formal “Digital currencies: response to the call for information” alongside the Budget. In the response, HM Treasury:
- Explained that the government will (*) launch “a full consultation on the proposed regulatory approach early in the next Parliament”. This consultation will:
- “seek views and evidence on … 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”; and
- “look at how to ensure that law enforcement bodies have effective skills, tools and legislation to identify and prosecute criminal activity relating to digital currencies, including the ability to seize and confiscate digital currency funds.”
- Confirmed that the UK will continue to contribute to the Financial Action Task Force’s preliminary assessment of “virtual currencies”; and
- Included a reminder that “in February 2015, the Bank of England announced it will undertake research on central bank-issued digital currencies as part of its new research agenda”.
Our blogs about (a) HM Treasury’s call for information (and our predictions for the government’s response – which were accurate (phew!)); and (b) the Bank of England’s One Bank Research Agenda are here and here.
(* Presumably, if this government survives the UK election on 7 May 2015, and these issues are still sufficiently high on its legislative agenda.)