HMT confirms that they will extend scope of AML requirements to digital currency exchanges however they will not try to capture wallet providers.
HM Treasury launched a Call for Information in 2014 on the benefits and risks
associated with digital currencies. Respondents to the Call for Information identified
that digital currencies and associated technology have the potential to deliver real
benefits for businesses and consumers. Responses also highlighted that some
features of digital currencies could provide opportunities for illicit use. HM Treasury
notes this potential risk, while acknowledging that evidence from across
government, law enforcement and academia suggests that there is currently a low
level of illicit activity in digital currency networks.
We intend to bring digital currency exchange firms into anti-money laundering
regulation, as it is at the point where users “cash in” and “cash out” of digital
currency networks that money laundering and terrorist finance risk is highest. This
is consistent with a risk-based approach, and we note that extending the perimeter
of anti-money laundering regulations beyond digital currency exchange firms (e.g.
to wallet providers) would not deliver any benefits in terms of mitigating money
laundering and terrorist finance risk, and would place significant burdens on firms in
this innovative and embryonic sector.