After the Internal Revenue Service (IRS) required the cryptocurrency marketplace, Coinbase, to hand over user data following the company's devastating defeat in court, the UK Treasury - seemingly emboldened - has taken aim at regulating these currencies as well. Claiming that it has concerns about money laundering and tax evasion, the Treasury aims to bring it in line with its financial regulations.
Under the plan that has been implemented across the European Union, platforms where currencies like Bitcoin, Ethereum, and others are stored, will have to hand over financial trading information if - or when - they detect suspicious activities. This has been implemented since the allure of anonymity in holding these currencies have become an attractive way for criminals to store value. In the case of Coinbase, it is required by law to hand over data when any US citizen sent, received, or traded $20,000 worth of these currencies.
A spokesperson for the UK Treasury declared as much in a press statement:
"We have clear tax rules for people who use cryptocurrencies, 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."
Bitcoin has seen stratospheric market gains in recent months, as financial institutions try to get in on the action that has reportedly made billionaires out of early adopters. The currency reached $11,500 after news broke of the first Bitcoin futures trading platform coming online by December 18, or at least aiming to.
It is, therefore, not surprising that governments around the world are trying to regulate this burgeoning 'commodity'. Earlier this year China banned Initial Coin Offerings (ICO), after declaring that it was illegal and could cause disruption in its economy. ICOs are much like Initial Public Offerings (IPO), however, instead of funds coming through the stock market, these rely on campaigns through social media - for the most part - in an attempt to source its funding by investment through digital currencies like Bitcoin.
However, several other governments have embraced the advent of the digital currency, with India and Russia mulling the creation its own version of this commodity. The Venezuelan government has jumped ahead, by announcing that it will launch the 'Petro', a digital currency backed by the country's vast natural resources.