After a week of headlines and price volatility a treasury spokesman said: “We have clear tax rules for people who use crypto-currencies and like all tax rules, these are kept under review
“We also intend to update regulation to bring virtual currency exchange platforms into anti-money laundering and counter-terrorist financing regulation.”
The move comes after a hectic fortnight for the digital currency after breaking another record on Sunday and climbing to $11,773 (£8,736).
Last week’s volatility capped a 30 per cent surge after dropped down to $9,021 (£6,696) on Thursday.
There was another huge moment in Bitcoin’s move towards the mainstream last week after US derivatives regulator says it will allow CME Group and CBOE Global Markets to list Bitcoin futures paving the way for CME and CBOE to become the first traditional US regulated exchanges to launch trading in Bitcoin-related financial contracts.
As finance firms begin offering Bitcoin to investors, Duncan Donald, CEO of London Academy of Trading told Express.co.uk that with any financial product or service, regulation should be a necessity not a preference.
Mr Donald says, “If Bitcoin is going to take steps to becoming a mainstream monetary solution, then ensuring standard due diligence is adhered to by all participants is a prerequisite”.
Adding that the current Bitcoin buzz means that there is not a banking CEO out there not being asked their thoughts on Bitcoin but without the implementation of regulatory anti-money laundering checks, they won’t be able to join the party.
Positivity for the Treasury’s plans comes from Benjamin Dives, CEO of London Block Exchange who says that its tine for cryptocurrencies to “grow up”. Telling Express.co.uk: “Cryptocurrency fundamentally challenges the traditional institutions that have managed money for centuries. This is exactly what makes it so special, but doesn’t mean that it shouldn’t be regulated.
“Growing up” according to Mr Dives means applying the same standards of rigour for any financial product, which includes full identification of who customers are and where their funds have come from.
Craig Parkin, Associate Partner at Citihub Consulting told Express.co.uk that regulations at this point are “undoubtedly a good thing” and will help further protect investors.
As Bitcoin moves towards the mainstream financial sevices, Mr Parkin says: “Regulations in non-cryptocurrencies are currently being implemented to ensure markets are fairer, more transparent and investors are protected; all of which could be extended to the trading of cryptocurrencies”.
Daniele Bianchi, Assistant Professor of Finance, who researches Bitcoin at the University of Warwick told Express.co.uk: “As of now, exchange platforms are essentially over-the-counter. Similarly, Initial Coin Offerings (ICOs) are completely unregulated. This opens up the possibility to frauds and losses for the non-professional investors.
Ms Bianchi says that more regulation is needed to make cryptocurrencies more appealing to a mass market but how more control in a system which is based on partial anonymity can be implemented is still to be fully understood.
“Exchanges having to carry out due diligence and report suspicious transactions is a natural consequence of the cryptocurrencies market becoming more mature”, Ms Bianchi says.
“The amount of transactions in Bitcoins is still a tiny fraction of regulated electronic payments, such as PayPal, Mastercard and Visa.
“A big boost could come from large retailers such as Amazon and Alibaba adopting Bitcoin for payments.”
Robert Edwards, CEO of Bond told Express.co.uk that regulations will be seen as a good or a bad thing, depending on your perspective.
“The anonymity of cryptocurrencies is a big part of their popularity, Mr Edwards says, “some early investors have made very healthy returns, without having to identify themselves, which for many investors is seen as a positive.
“However we have also seen a lot of bogus crypto offerings and many investors have fallen foul of such offerings.
“Regulations were brought into the financial markets to protect investors interests for the long term. If cryptocurrencies reputation is to remain positive over a long term, some form of governance will be needed to safeguard investors.”