The United Kingdom Treasury has published an official response to the call for information on digital currencies. According to the document, bitcoin exchanges in London may soon face new regulations.

The Treasury suggests new steps on page 4 of the new document:

“The government intends to apply anti-money laundering regulation to digital currency exchanges in the UK, to support innovation and prevent criminal use. The government will formally consult on the proposed regulatory approach early in the next Parliament”

According to the document, “the government will look at how to ensure that law enforcement bodies have effective skills, tools and legislation to identify and prosecute criminal activity relating to digital currencies, including the ability to seize and confiscate digital currency funds where transactions are for criminal purposes”

In addition to these, the UK government will also increase funding to research.  Treasury advises increasing the amount of research funding in this area by £10 million to support this.

 Treasury clerks collected answers from representatives of the bitcoin industry about possible regulation:

“The majority of digital currency firms, consultancies and academics called for such regulation, and they also emphasised that regulatory requirements must be proportionate to the risk posed, to avoid unnecessarily stifling competition and innovation in a nascent industry. Most banks and payment scheme companies also recommended regulation, and highlighted the need for clear guidance on their obligations under anti-money laundering and counter terrorist financing rules”
The Treasury states that the document was the result of intensive work with leading representatives of the industry.

"The call for information received over 120 responses. Submissions came from members of the public who use digital currencies,digital currency developers, businesses providing digital currency-related services, banks, paymentscheme companies, academics, consultancies and other government departments and agencies."
Almost 80 responses considered some kind of government regulation for the industry and the majority of these responses agreed that now is the right time to start regulating the sector. Over 20 respondents mentioned education and guidance as important factors for the development of digital currencies, while several others, including banks and an unnamed government department, proposed the direct integration of digital payment methods by the UK government and the Bank of England, including the issue of a 'digital sterling'.

It is interesting that the statement highlights the blockchain technology as possessing a lot of potential for particular benefits and innovations in payments and beyond:

"The government considers that while there are clear barriers to digital currencies achieving widespread use in their current form, the ‘distributed ledger’ technology that underpins digital currencies has significant future promise as an innovation in payments technology." 

The government also singles out micro-payments and cross-border transactions as the most obvious primary target areas of  digital currencires. The overall conclusion about the benefits of cryptocurrencies is very optimistic:
"The government considers that digital currencies represent an interesting development in payments technology, with distributed, peer-to-peer networks and the use of cryptographic techniques making possible the efficient and secure transfer of digital currency funds between users."