In a response to the Treasury’s call for information on digital currency, the Home Office highlighted both the positives and negatives of existing digital currencies, such as Bitcoin.
The government department, which is responsible for immigration, counter-terrorism, police and drugs policy, recognised the low cost of transactions and increased speed of payments provided by digital currencies. However, the document also highlights some of the associated downsides, such as the fact cryptocurrency affords a degree of anonymity to criminals.
One major advantage of government-created digital currency is that it could be designed to limit use for criminal and terrorist purposes. The response suggests a government-issued digital currency should be designed in such a way that its ownership and use can be traced, enabling law enforcement agencies to identify whether it has been used for criminal or terrorist purposes and who by.
According to the Home Office, cryptocurrency exchanges should be licensed, with their licenses withdrawn if they fail to meet certain requirements, such as the monitoring of transactions and reporting suspicious activity to the National Crime Agency.
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