The Government has no current plans to introduce deposit guarantee protections for consumers holding digital currencies, but keeps all policy under review.

The European Union's Fourth Anti Money Laundering Directive (4MLD) was implemented into UK legislation by 'The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017', which came in to force on 26 June 2017. Digital currency exchanges are not regulated for the purposes of 4MLD, so there is no requirement to undertake Customer Due Diligence for trade and investment in digital currencies at present.

The government has however committed to bringing digital currencies into the scope of anti-money laundering and counter terrorist financing (AML/CTF) regulation. Provisional political agreement has recently been reached at EU-level to amend 4MLD to bring digital currency exchange platforms and custodian wallet providers into the AML/CTF regime.

These amendments will require Member States to oblige these entities to conduct customer due diligence when establishing a business relationship, when carrying out occasional transactions of €15,000 or more, when carrying out a transfer of funds exceeding €1,000, where there is a suspicion of money laundering or terrorist financing, and when there are doubts about the veracity or adequacy of previously obtained customer identification data.

The Government does not have any holdings of digital currencies.

HMRC does not currently offer digital currencies as a payment method and there are no plans to do so in the future.

HM Treasury does not have any holdings of Bitcoin or other crypto-currencies. HM Treasury and the Bank of England publish details of the UK’s current international reserves, including foreign currency assets, on a monthly basis.

The government has not made any formal assessment of the value to the UK of Bitcoin or other cryptocurrencies.

The government is currently negotiating amendments to the European Anti-Money Laundering Directive which will extend regulation to virtual currency exchange platforms and custodian wallet providers. These amendments will enable competent authorities to ensure these firms are mitigating the risks regarding money laundering and terrorist financing, and enable the legitimate sector to grow. We expect these negotiations to conclude at EU level by early 2018, with a year for Member States to then implement the Directive.

The government has not made any formal assessment of the value to the UK of Bitcoin or other cryptocurrencies.

The government is currently negotiating amendments to the European Anti-Money Laundering Directive which will extend regulation to virtual currency exchange platforms and custodian wallet providers. These amendments will enable competent authorities to ensure these firms are mitigating the risks regarding money laundering and terrorist financing, and enable the legitimate sector to grow. We expect these negotiations to conclude at EU level by early 2018, with a year for Member States to then implement the Directive.

The independent Financial Policy Committee (FPC), established by the Government, aims to ensure the UK financial system is resilient to, and prepared for, the wide range of risks it could face — so that the system could support the real economy, even in difficult conditions.

The Bank of England continues to monitor developments, and provided its latest assessment of the risks to financial stability in the Financial Stability Report, published in November 2017.

In addition, the Financial Conduct Authority (FCA) has stated that it will continue to monitor distributed ledger technology (DLT)-related market developments, working collaboratively with industry, HM Treasury, the Bank of England, the Information Commissioner’s Office, and other UK bodies to ensure a coordinated approach towards DLT in the UK.

This information is not held centrally.

The Government has not made a formal assessment of the regulation of cryptocurrencies in other countries, though it is aware that industry has done so (for example https://bravenewcoin.com/news/icos-and-cryptocurrencies-a-rough-guide-to-global-regulation/) and, as with all policy, continues to monitor developments.

The Government is currently negotiating amendments to the 4th Anti-Money Laundering Directive that we expect to bring virtual currency exchange platforms and custodian wallet providers into the scope of Anti-Money Laundering and Counter-Terrorist Financing regulation. This will require such firms to conduct due diligence upon their customers, with their activities being overseen by national competent authorities for these areas. The government supports the intention behind these amendments. We expect these negotiations to conclude at EU level in late 2017/early 2018.

Gains made on digital currency are currently chargeable at the normal Capital Gains Tax rates, depending on the facts of the case. The government keeps all tax policy under review.

The Government is currently negotiating amendments to the 4th Money Laundering Directive that we expect to bring virtual currency exchange platforms and custodian wallet providers into the scope of Money Laundering and Counter-Terrorist Financing regulation. This will require such firms to conduct due diligence upon their customers, with their activities being overseen by national competent authorities for these areas. The government supports the intention behind these amendments. We expect these negotiations to conclude at EU level in late 2017/early 2018.

HM Revenue and Customs does not offer digital currencies as a payment method and has no current plans to do so.

The Crown Prosecution Service (CPS) has obtained one confiscation order to the value of £2.2m, of which approximately £26,000 (1% of the total) is held in a digital currency. The confiscation order must be paid in pounds sterling. The Serious Fraud Office (SFO) has not obtained any confiscation orders of this type. Other prosecutors outside of the CPS and SFO have powers to obtain confiscation orders; data for those prosecutors is not known.

The CPS has successfully obtained 5 restraint orders where the assets restrained include digital currency. The CPS has obtained ancillary orders from the Crown Court to make those restraint orders more effective by requiring suspects or defendants to repatriate digital currencies held abroad to the UK, to disclose the full particulars of digital currencies held and to allow the digital currency held to be converted to a flat currency, namely pounds sterling.

The CPS is considering the execution of a mutual recognition request from an EU Member State, which has sought recognition of a freezing order over digital currency held in digital currency exchange accounts.

The Government is currently negotiating amendments to the 4th Anti-Money Laundering Directive that we expect to bring virtual currency exchange platforms and custodian wallet providers into the scope of Anti-Money Laundering and Counter-Terrorist Financing regulation. This will require such firms to conduct due diligence upon their customers, with their activities being overseen by national competent authorities for these areas. The government supports the intention behind these amendments. We expect these negotiations to conclude at EU level in late 2017/early 2018.

The Government keeps all policy under review. The Government is currently negotiating amendments to the 4th Anti-Money Laundering Directive that we expect to bring virtual currency exchange platforms and custodian wallet providers into the scope of Anti-Money Laundering and Counter-Terrorist Financing regulation. This will require such firms to conduct due diligence upon their customers, with their activities being overseen by national competent authorities for these areas. The government supports the intention behind these amendments. We expect these negotiations to conclude at EU level in late 2017/early 2018. The stance of individual firms towards providers of digital currencies is a commercial decision for those firms, and it would not be appropriate for the Government to intervene.

Last month, the Financial Conduct Authority issued a consumer warning about the risks of Initial Coin Offerings (ICOs). It advised consumers to be conscious of the risks involved (including the possible lack of regulation and investor protection, price volatility and potential for fraud) and to fully research the project before investing. The Financial Conduct Authority (FCA) also noted that whether an ICO falls within the FCA’s regulatory boundaries or not can only be decided case by case.

The UK government is currently negotiating amendments to the 4th Anti-Money Laundering Directive that 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. The government supports the intention behind these amendments. We expect these negotiations to conclude at EU level in late 2017/early 2018.

In the National Strategic Assessment published by the National Crime Agency (NCA) in 2017, the NCA assessed that cryptocurrencies will remain an enabler for online criminality because of their accessibility, perceived anonymity, speed of cross-border payments and irreversible payment mechanism. http://www.nationalcrimeagency.gov.uk/publications/807-national-strategic-assessment-of-serious-and-organised-crime-2017/file

The UK’s first National Risk Assessment (NRA) of money laundering was published on 15 October 2015. It identified the threats and vulnerabilities faced in this area, and assessed that such currencies posed a low risk for money laundering.

https://www.gov.uk/government/publications/uk-national-risk-assessment-of-money-laundering-and-terrorist-financing

The Government is currently updating the NRA, which will provide an updated view of the money laundering risk posed by cryptocurrencies. The NRA will be published in the autumn.