Bitcoin seemed to be recovering at a hangover-ish pace after being pummeled by the grim news of a potential cryptocurrency ban in South Korea.
The recovery, however, was short-lived as it emerged that the UK was weighing its own set of measures to curb cryptocurrency speculation.
we should be looking at these very seriously precisely because of the way bitcoin can be used, particularly by criminals. It is something that has been developing. I think it is something that we need to look at, said Prime Minister Theresa May.
Chancellor Phillip Hammond concurred with May, calling for regulation to rein in Bitcoin.
Hammond admitted he was “interested in Bitcoin” but still believed that “we should be cautious about [the cryptocurrency].”
“we do need to look at the way we regulate this environment before the amount of outstanding Bitcoin becomes large enough to be systematically important in the global economy. It’s not there yet, but it could get there soon,” he added.
After these statements, Bitcoin lost roughly 10% of its value, sliding from $11,600 to $10,500.
Last month, a UK financial regulator issued a warning to investors, telling them they should be prepared for the worst.
“If you want to invest in Bitcoin, be prepared to lose all your money. That would be my serious warning,” said Andrew Bailey, CEO of the Financial Conduct Authority.
Judging by the tone of the prime minister and the chancellor, it doesn’t appear as if they are intent on banning cryptocurrency trading entirely, like South Korea did.
The UK may continue to pursue its agenda of drafting regulations against money laundering, de-anonymizing trade inside of the country.
On the other hand, such regulations would be easy to get around since investors could simply opt to use services in other countries.
Currently, investors in Bitcoin are enjoying a tax loophole that allows them to declare their income as winnings from gambling, which are tax-free.