Danny McCance 4 Dec 2017 12:52pm

Treasury to open inquiry into Bitcoin

The government plans to crack down on the cryptocurrency amid fears that it is being used for money laundering, terrorism funding and theft

In an interview with the Telegraph, John Mann, a member of the Treasury Select Committee, said that he “wasn’t convinced” that authorities were on top of the emerging currency and expected that there would be an inquiry next year.

”These new forms of exchange are expanding rapidly and we've got to make sure we don't get left behind - that's particularly important in terms of money-laundering, terrorism or pure theft,” he said.

This comes a month after MP Stephen Barclay revealed that the UK government was negotiating amendments to the EU’s Fourth Anti-Money-Laundering Directive.

 “[The directive] will bring virtual currency exchange platforms and custodian wallet providers into anti-money laundering and counter-terrorist financing regulation, which will result in these firms’ activities being overseen by national competent authorities for these areas,” Barclay stated.

He added that the government expected the negotiations to be concluded “at EU level” by early 2018.

While addressing the tax implications of cryptocurrencies, Robert Langston, tax partner at Saffery Champness, said that although HMRC has some mechanisms for taxing them, he expected more would be needed in the future.

“Cryptocurrency markets have become more established, and we shouldn’t be surprised to see HMRC, and indeed other government bodies, sit up and take notice to ensure they aren’t being short-changed by technology,” he said.

“We would also anticipate greater scrutiny of the accounting and tax treatment in the companies which are issuing tokens via initial coin offerings (ICOs).”

Last week, PwC Hong Kong became the first Big Four firm to accept bitcoin as a payment for its advisory services.

“We are working to address concerns about the use of cryptocurrencies, by negotiating to bring virtual currency exchange platforms and some wallet providers within Anti-Money Laundering and Counter-Terrorist Financing regulation," a Treasury spokesman said.