Governments Zero In On Digital Currency Controls

Cryptocurrencies are likely to come under the cosh as governments around the world are calling for regulation to crack down on criminals and terrorists.

Government leaders claim the lawless realms of Bitcoin, Ethereum, Litecoin and dozens of other cryptocurrencies allows crooks to pass money across borders without any checks or penalty.

British Prime Minister Theresa May is one of the leading cryptocurrency critics.

“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.

Her comments come after Bank of England governor Mark Carney recently warned that the UK developing an online currency could make the banking system unstable.

Lawless and wild frontier

Many finance professionals consider digital currencies as lawless and a shelter for criminals who can launder money through the network.

Cryptocurrencies are also regarded as investment rather than money by many governments, which is raising tax claims against traders who have made fortunes from rising values in recent months.

As assets rather than money, cryptocurrencies are subject to capital gains tax laws.

Bitcoin is the leading cryptocurrency.

The virtual currency that trades online without any government or central bank regulation soared in value from $900 to a peak of $20,000 during 2017. Current trading is around $11,300.

Following May’s warning, Japanese digital currency exchange Coincheck pledged to refund customers $423 million of stolen cryptocurrency NEM.

Around 260,000 customers are reported to have lost up to $465 million after the company detected an ‘unauthorised security breach’ in the digital exchange.

Coincheck servers hacked

“We know where the funds were sent,” said a Coincheck spokesman. “We are tracing them and if we’re able to continue tracking, it may be possible to recover them.”

“We realize that this illicit transfer of funds from our platform and the resulting suspension in services has caused immense distress to our customers and we would like to offer our deepest and humblest apologies to all of those involved.

“In moving towards reopening our services, we are putting all of our efforts towards discovering the cause of the illicit transfer and overhauling and strengthening our security measures.”

Coincheck has operated since 2012 in Tokyo and has grown to one of the country’s largest cryptocurrency exchanges, employing more than 70 staff.

NEM, a digital currency like Bitcoin, was stored on the company’s servers which could be accessed by hackers rather than an uncoupled ‘cold’ wallet which is detached from the servers.

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