According to a response from Accenture to the Treasury’s call for information on digital currencies, the company takes a very positive stance on cryptocurrencies, such as Bitcoin, highlighting their potential. However, the document also recognises the risks associated with these currencies, including price volatility, lack of consumer protection and the potential loss of funds, for example by forgetting a private key, or through a fraudster gaining access.
Accenture believes Bitcoin’s biggest problem currently is its association with, and use in, money laundering. It claims the identification requirements applied to bank accounts should also be applied to bitcoin wallets. Accenture stresses repeatedly in the document that regulation should be limited to digital currency wallets, rather than applied to digital currencies more broadly.
Accenture suggests the government take limited actions, which could include regulating so that digital currency wallets can be identified uniquely and recognised through KYC checks or providing a framework of clear rules and responsibilities for the participants of the digital currency wallet market on how to place controls on the digital currency wallets to help prevent financial crimes (AML and sanctions).
Accenture proposes the creation of an Authorised Digital Currency Wallet Institutions list, similar to the list of Authorised Payment Institutions. These institutions would be authorised and regulated by a central authority, such as the FCA and they would be required to issue digital currency wallets and identify the digital currency wallet owner through KYC checks, maintain a compliance status of each digital currency wallet and be able to freeze digital currency wallets where they are being used for suspicious activity.
Accenture believes that, without Government intervention, UK banks are not likely to provide digital currency businesses with support, which will further hamper payments innovation and drive cryptocurrency companies abroad.
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