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The UK is Cracking Down on Bitcoin

April 5, 2018 Blog

Bitcoin investors must ensure they are in full compliance with all rules and regulations regarding investing in cryptocurrencies and paying taxes on those investments.  Talking with a Bitcoin attorney can be important in understanding the rules and ensuring you comply with all of your obligations as an investor.

Getting legal help can be especially important as laws related to Bitcoin continue to evolve. In fact, according to The Guardian, the Bank of England warned recently that bitcoin was facing a regulatory crackdown.

Bitcoin Facing Regulatory Crackdown

The Bank of England issued a warning about coming regulations on Bitcoin and other cryptocurrencies because the British government does not believe that these currencies are effectively fulfilling the most basic and important function of money.

Bitcoin and other cryptocurrencies have been concerning to authorities who worry that anonymous currencies are often used to mask illegal activities. In particular, regulators have warned about cryptocurrencies being used to launder money, or to finance unlawful behaviors including trading in controlled substances and even terrorism.

The government and leading economists have also expressed concern that people could become caught up in cryptocurrency trading without fully understanding the risks and could end up being victimized by exploitive behavior.

Other countries have also moved to impose stricter regulations on cryptocurrencies out of concern that unlawful activity is occurring or concerns about investors at risk of being defrauded. In China, for example, the government clamped down on initial coin offerings, in which new cryptocurrencies are released to the market and sold to investors.  Regulators have also increasingly made attempts to reduce the risk that cryptocurrencies are at risk of market manipulation.

The goal of regulators who are increasingly making moves to impose limits, restrictions, and rules on bitcoin and other cryptocurrencies is to combat illegal activities through imposing more controls on cryptocurrency exchanges. They want central banks and governments to play much more of a role in how bitcoin and other cryptocurrencies are exchanged and monitored.

However, advocates of bitcoin and similar currencies argue that blockchain technologies which power these alternative currencies will reshape and revolutionize the financial system. They argue that these regulations aren’t necessary or effective and claim that Bitcoin’s decentralization and the lack of oversight by central banks are features of the currency rather than problems to be solved.

Despite this, monetary authorities and government entities continue to push for tighter rules and regulations, all of which could affect the bitcoin market, cryptocurrencies as a whole, and the rights of investors who have chosen to buy these alternative currencies. If you are a bitcoin investor and you want help understanding the regulatory climate or ensuring that you are operating within the law when you purchase or own bitcoin or other currencies, you should contact a Bitcoin attorney for help as soon as possible.