CRACKING DOWN ON BITCOIN?

Interesting to read plans by the UK Treasury and EU regulators to crack down on the virtual currency Bitcoin.

robocoinkiosk_bitcoin_atm_a2515ec

The aim seems to be to extend anti-money laundering regulations to cover the Bitcoin exchanges (these are the websites where you can use your Dollars and Pounds, for example, to buy the “crypto currency”)

I’m currently working on a Bitcoin-laundering story, and I have to say, no amount of regulation could have stopped the kind of shenanigans I’ve witnessed.

In addition, presumably the new rules won’t cover exchanges that base themselves outside EU and UK jurisdictions. (Anyone wondering how nightmarish it can get when an exchange goes wrong would do well to read this Reuters investigation into the failed exchange Mt. Gox).

And it should be pointed out that many exchanges already insist on identity checks, especially for new customers. (And when I last used a Bitcoin ATM there were ID checks for transactions over 500 quid).

But the other big loophole here is that there are two ways to get Bitcoin: you can buy it (through one of the exchanges I mention above), but you can also mine it (miners are responsible for checking the veracity of all Bitcoin transactions, and their reward for doing so is paid in freshly-minted Bitcoins)

As long as the “Royal Mint” of Bitcoin money supply is outside regulators’ hands, it’s hard to see how any crackdown can really threaten the currency’s underground user base.

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