Bitcoin draws calls for more regulation at Davos

Politicians from around the globe attending the World Economic Forum in Davos have put cryptocurrencies such as Bitcoin in their crosshairs, calling for more regulation to prevent them from being used for criminal activity.

Speaking to Bloomberg, Prime Minister Theresa May said: "We should be looking at these very seriously precisely because of the way they can be used, particularly by criminals.

"It's something that has been… increasingly developing. I think it's something that we do need to look at" she said.

The digital currency, which is used to make payments of any value with minimal fees, runs on the blockchain, a decentralised ledger kept running by "miners" whose computers crunch transactions and are rewarded in bitcoins, according to the Daily Telegraph.

It has enjoyed a meteoric rise in value over the past year, although its value has fallen somewhat since the start of 2018.

Philip Hammond, the Chancellor of the Exchequer, added: "I think we should be cautious about Bitcoin and possibly we do need to look at the way we regulate this environment before the amount of outstanding Bitcoin becomes large enough to be systemically important in the global economy."

He said: "It is not there yet but it could get there soon."

Hammond said that the Bank of England had led central banks' response to the rise of Bitcoin, which he called a "very interesting, new development".

The Telegraph revealed in December last year that the Bank of England could green-light its own Bitcoin-style digital currency and had set up a research unit to investigate the possible introduction of a crypto-currency linked to sterling.

The Chancellor said that it was "really important" that in regulating these cryptocurrencies, "we don't inadvertently constrain the potential of the technology that underlies it, the blockchain technology, which has a wider and more important application".

Hammond said Bitcoin would be discussed when the G20 group of nations meets in November in Argentina.

Speaking on a panel on the 'remaking of global finance', Steven Mnuchin, the US Treasury Secretary, said: "My number one focus on cryptocurrencies, whether that be digital currencies or bitcoin or other things, is that we want to make sure that they're not used for illicit activities."

Mnuchin said that the US wants the rest of the world to have the same regulations it does, which he said hold Bitcoin wallet holders to the same standards as banks.

"We encourage fintech and innovation but we want to make sure all of our financial markets are safe," he said.

In response to calls yesterday from French President Emmanuel Macron that the International Monetary Fund should oversee investigations into cryptocurrencies and shadow banking, Christine Lagarde, managing director of the IMF, said that it had already begun "monitoring and surveilling and analyzing the risks associated with the development of cryptocurrencies and the potential benefits out of it."

She said that the lack of transparency in cryptocurrencies' transactions "conceals and protects money-laundering and financing of terrorism and all sorts of dark trades", which said was "just not acceptable".