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EU And UK Plan Bitcoin Crackdown Amid Crime And Tax Evasion Fears

EU And UK Plan Bitcoin Crackdown Amid Crime And Tax Evasion Fears

A Bitcoin (virtual currency) coin is seen in an illustration picture taken at La Maison du Bitcoin in Paris, France, June 23, 2017. | REUTERS/Benoit Tessier/Illustration

The EU and the United Kingdom are launching a crackdown on Bitcoin amid growing concerns that the virtual currency is being used to launder money and facilitate tax evasion. This comes as the cryptocurrency reached a new record high of $11,800 on Sunday despite widespread skepticism.

The Treasury has disclosed its plans to regulate the virtual currency forcing traders to disclose their identities and report suspicious activity. The measure encompasses all cryptocurrencies, not just Bitcoin, in order to bring them in line with anti-money laundering and counter-terrorism financial legislation.

"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," the Treasury said. "There is little current evidence of them being used to launder money, though this risk is expected to grow."

Other EU governments are also putting forward similar crackdowns where online platforms where bitcoins are traded will be required to carry out due diligence on customers and report suspicious transactions. The rules are expected to come into effect in the next few months drastically affecting Bitcoin whose total value now amounts to $195 billion.

As a result of the announcement, the cryptocurrency fell to $10,554 from its record high. So far, has recovered some of its losses trading at $11,566 as of Monday.

Financial experts have expressed their concern regarding the virtual currency with one Yale expert calling them a "dangerous speculative bubble."

"This is a toxic concept for investors," said Stephen Roach, Yale University senior fellow and the former Asia chairman and chief economist at investment bank Morgan Stanley. "I've never seen a chart of a security where the price really has a vertical pattern to it. And bitcoin is the most vertical of any pattern I've ever seen in my career."

Bitcoin has surged more than 1,000 percent in this year alone, thanks in part to rising interest from retail and institutional investors who view the digital currency as a possible future means of exchange and store of value. However, Roach has a word of warning to all who wish to join the decentralized currency.

"Like all bubbles, they burst," Roach said. "They go down, and the one who's made the last investment gets hurt the most, there's no question about it."

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