Back in March of 2014 the UK Treasury sent out a call to academics, companies and individuals to give their opinions on the rise of digital currencies - the outcome of this has been hotly awaited. On the 18th a reply was delivered alongside the budget and is, against some expectations, a generally pleasing read.
The key conclusions of the report are:
- The UK government will seek to apply existing anti-money laundering law to digital currency exchanges,
- There will be government support for a British Standards Institute (BSI) project to bring in best practise for digital currencies,
- £10 million will be injected into research on digital currencies.
We're yet to see exactly who will be targeted by the money laundering law changes but if it's a straight application of UK law then it will only be UK based exchanges that have to worry about this new position. We'll have to wait until June of this year to see what the Financial Action Task force make of all this.
The overall message of the report is praising of Bitcoin, digital currencies in general and the underlying technology. There is the predicable meddling from this with an opposed interest but the government has rightly ignored those clamorous voices.
If you look on the back page of the report there is only one payments infrastructure processor...
The government demonstrated a strong understanding of the technology, grasp the applications (potential and current) and clearly have an open mind to digital currencies. Micro-payments and micro-payrolls are discussed as is the so-called 51% attack - they seem to know what they're talking about - forgive this author's incredulous tone.
There's understandable caution and emphasis on the illegal uses of digital currencies but that's understandable since it's the government after all. Also, they don't take the position that digital currencies are 'for' criminals but rather, that at the moment they're being used by criminals. Alongside this, there's the reassuringly normal observation that any serious money launderer would still just use cash.
All-in-all this is is a positive report and we should hope that the good work is continued in the next parliament.