Sunday 18 January 2015 6:30 am

British banks warn Bitcoin could help terrorists

Cryptocurrency Bitcoin could make it easier for terrorists to evade the intelligence services, according to Britain's leading banks.

In a document sent to the Treasury the British Bankers Association (BBA) warned the chancellor that partial anonymity Bitcoin provides, and its structure as a peer-to-peer currency provide opportunities for criminals.

The association said banks “need to be able to demonstrate that transactions are legitimate and that they are not supporting criminal or terrorist activity. At present … [banks] are unclear on their responsibilities with regards to servicing those working with, paying or receiving digital currencies".

Last year, George Osborne announced plans to explore how cryptocurrencies such as Bitcoin can play a role in the UK financial system. Treasury was tasked to produce a report on digital currencies, examining their potential benefits and risks.

Osborne said he aims to make the UK the "global centre of financial innovation". Speaking to the Sunday Telegraph, chief executive Anthony Browne said:

The reality is that if terrorists and criminals harness these unregulated currencies they will be far harder for the law enforcement and intelligence agencies to hunt down.

Bitcoin has suffered a massive fall in its value over the past year. Lat year, the world's biggest digital currency reached the dizzying heights of $1,000 per Bitcoin. On Wednesday, Bitcoin fell through the floor touching lows of $173.