Brexit Britain’s Battle Against Bitcoin: What To Think Of This Developing Story
Politicians have moved from a ‘Laissez faire' approach to a more active one when it comes to cryptocurrencies. A number of British lawmakers have become more explicit in their desire to introduce regulations for Bitcoin, Ethereum and other major and Alt-coins in the crypto ecosystem in the ‘interests' of the consumers.
After the brutal market corrections sympathy for those that unfortunately felt the rough edge of the recent market corrections, and the occasional ICO scam.
While it represents an interesting change of pace with regards to the UK's otherwise commendable ‘hands-off' approach, is there much that Brexit Britain could do from a regulatory standpoint? Sources say no, apart from grab at the legalistic equivalent of low hanging fruit, and there are a great many crypto-enthusiasts that may be relieved about that.
There's been a continuous battle against money-laundering and financial crime which requires funding and regional co-operation, all of which are being constrained by the UK's departure from the EU. There must be a significant amount of irony in holding up cryptocurrencies as the sole perpetrator of laundering and financial crime when, statistically, gold and fiat have been the single largest components of these criminal activities.
When it comes to any federated or international push for regulations in the world of cryptocurrency, the act is herculean and premature. This is not to say that there are no issues with the crypto market, when it comes to the world of ICOs, there have been a large number of hacks which have blighted cryptocurrency exchanges, costing them a collective $2.3 billion, according to research provided by Crypto Aware.
With this in mind, surely it's a matter of regulatory policy towards coin exchanges with this research in mind? As opposed to against cryptocurrencies as a whole; the former is challenging, but possible, while the latter is to channel Sisyphus.
Cryptocurrencies like Bitcoin do have some history of supporting white-collar and money laundering, with billions of privacy-centric crypto like Monero, Bitcoin and Bitcoin Private being used for this purpose. But while the demonizing finger gets pointed at crypto, it's been demonstrated that:
- Cryptocurrencies are harder to launder with, forcing criminals to revert to fiat
- For every dollar worth of crypto, there are leagues more in the way of fiat in international bank accounts used in these same, if not far worse crimes, as we're seeing recently with the widening investigation of Danske bank and its potential laundering of $236 BILLION.
One of the issues that cryptocurrencies do find themselves at odds with is the makeup of their population of investors. These investors which, compared to those involved in forex, commodities, etc, have little to no experience, placing them in a greater level of risk.
One of the other matters that Crypto does have as a limitation is the underlying liquidity of their assets; and the subsequent volatility that comes with that.
The [pipe] dream of governments is to construct and implement a regulatory framework which is able to, somehow, filter all of the net positives associated with blockchain technology, including all of the various things that it will generate – taxable income, output, jobs – while foolishly believing they can shun 100% of nefarious activities which Cryptocurrencies are poorly branded as being the sole perpetrator of, despite the fact that they are in a significant minority compared to their older counterparts.
Currently, the UK Treasury Select Committee has been calling for the country's Financial Conduct Authority to be given legal powers to safeguard consumers, and maintain some semblance of market integrity with regards to the matters of ICOs and coin exchanges. As part of that, this committee calls for a new line of Anti-Money Laundering regulations for cryptocurrencies (the irony). It's through this that the committee hopes to make the City of London a global digital currency center.
A pessimist is what an optimist calls a realist, however, and the question is this: how on earth does the FCA think it's going to do this? Especially considering that things, financially speaking have become far more shoestring? This is the same organization which has one employee per 15 firms in the UK, and now it wants to add international coin exchanges and ICOs to the list.
At the moment, the UK's departure from the EU is already going to put the pressure on them. According to the FCA Chairman, Charles Randell, he stated that the organization's spending of £30 million on preparing for the eventual departure from the EU has forced them to make ‘difficult decisions' on their budget. If we take into consideration that this is an understaffed, underfunded organization already, it's now sniping for cryptocurrencies and exchanges… Sisyphus indeed.
Having a Britain which must now forge its own path in terms of regulation may find itself missing out on the wider anti-money laundering intiative's set out by the EU, or fortunate enough to avoid them and forge its own free-trade approach.
There have been other jurisdictions which have put forward their own tough rules, such as New York, which has discovered first-hand that attempting to regulate international exchanges is, as Top Gear was once known for saying, ‘Ambitious but rubbish.'
Where these countries and federations may seek to put the metaphysical screws to crypto, perhaps Britain can take a leaf from Malta's book, and make life easier, with firm but fair rules on a crypto market it takes time to understand.
One of the ways that Britain can make a start on pushing the boulder is for it to clean up the number of firms which are registered with Companies House. As has been the case before (and during) crypto, this has been a conduit for shell companies and scams. U.K. corporate entities made up a large part of the customer base of Danske Bank’s Estonian branch, which is at the center of a vast money-laundering scandal.
Crypto doesn't need a leash for countries to yank on, it needs a guiding and re-assuring hand from a government that takes the time needed to weave effectively around it. To do otherwise would be to relegate Britain to secondary importance in the same thing that the City of London wants to become a hub for.