HM Treasury had received over 120 responses to its call for information about digital currencies and released a response that represents encouraging progress in several key areas: anti-money laundering, customer protection, and technical standardization.
“This response is important for cryptocurrency companies in the UK because it demonstrates a pragmatic, collaborative and priority-driven approach to regulation. The Treasury’s willingness to work alongside entrepreneurs to promote financial innovation while working tirelessly to protect consumers is a main reason the UK holds its place at the forefront of fintech innovation globally,” told Nathan Jessos, an analyst at the UK-based digital asset services company Elliptic, in an interview to CoinSpeaker.
The government has intentions to apply anti-money laundering regulations to Bitcoin and other digital currencies to support innovation and growth in the revolutionary technology, decrease the rise of digital currencies-assisted criminal activities.
“Prioritizing anti-money laundering activities will bring much-needed legitimacy and clarity to the industry, and hopefully encourage banks to engage more with digital currency businesses. Furthermore, allowing the industry to develop its own consumer protection and technical standards will promote collaboration and innovation much more efficiently than top-down regulation,” added Mr. Jessos.
The report disclosed that the government will run a formal consultation in the next Parliament session this year and will discuss various critical issues of the digital currency industry, including effective implementation of the proposed regulatory actions. Besides, they will make decisions on how the law enforcement agencies can identify criminal activities more easily and terminate them.
Furthermore, the government will collaborate with British Standards Institution and the digital currency industry to develop “best practice” standards for customer protection. That is a prominent move on behalf of the government since the Bitcoin industry continues to be plagued by thefts, scams, and attacks.
The government will pump into an additional £10m in funding in this new initiative. The government will bring UK’s Research Councils, Alan Turing Institute, and Digital Catapult together with the industry to address the opportunities and challenges for the digital currency technology.
“The £10M research initiative is important because it is being allocated to organisations that focus on understanding underlying data structures,” commented Mr. Jessos.
“Allocating the grant to these organisations indicates that the Treasury is interested in supporting and understanding the underlying technology – the Blockchain – and understands the potential benefits it could bring to society,” he added.
There is no doubt that the prominent move will encourage other governments into moving fast with their plans for digital currencies.
Tom Robinson, a board member of UK Digital Currency Association, commented: “Today’s announcement is significant in that it brings Bitcoin and other block chain technologies closer to mainstream adoption.”