In the UK’s 2015 Budget, the Chancellor announced a number of policies in relation to digital currencies. These are intended to create the right environment for legitimate actors to flourish and to create a hostile environment for illicit users of digital currencies.
As part of the plans, the government will launch a new research initiative, which will bring together the Research Councils, Alan Turing Institute and Digital Catapult (a national centre responsible for accelerating the UK’s digital economy) with industry in order to address the research opportunities and challenges for digital currency technology, increasing funding by £10 million to support this.
As to law enforcement, the UK government will look at increased training and the development of existing techniques to ensure they have effective skills and tools to identify and prosecute criminal activity relating to digital currencies. Several users and digital currency firms have also suggested using trade bodies or other sources of expertise to improve understanding and awareness about digital currencies among police and intelligence agencies.
Most importantly, as part of its commitment to a healthy, regulated crypto-currency environment, the government plans to apply anti-money laundering (AML) and know your customer (KYC) regulation to digital currency exchanges in the UK. If approved, all digital currency exchanges will be required to implement AML and KYC processes into their operations. AML and KYC are part of the framework in those countries that have already passed Bitcoin regulations and mark a huge turning point for digital currencies.