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The Briefing

Risks of cryptocurrencies like Bitcoin must be better understood by accountancy profession, says ACCA

by Aiken PR

14/03/2018

 ACCA (the Association of Chartered Certified Accountants) has today issued a new warning to professional accountants over the importance of maintaining an up–to–date understanding of developments in the fast–moving space of cryptocurrencies like Bitcoin.

Following on from recent comments made by the US Securities & Exchange Commission, the UK’s Bank of England and with historical challenges of money laundering in Ireland and other countries, ACCA has called upon its Irish and global membership to take a leadership role in providing technical and ethical oversight of cryptocurrencies.

Maggie McGhee, Director of Professional Insights at ACCA says,

‘Bitcoin has at least three dimensions that are causes for concern. Firstly, its pseudonymous nature means that while one may identify the address a given payment goes to, it is not possible to confirm the identity of the underlying beneficiary.

‘This is an obvious risk for Money Laundering, Terrorist Financing and the funding of other types of illegal activities.  Secondly, its high volatility makes it inherently risky and unstable. Thirdly, it is funding a speculative bubble in other areas like Initial Coin Offerings (ICOs) with speculators chasing poorly formed business propositions.

‘It is important, however, to avoid blaming the house for the fault of the people living in it. The underlying blockchain (distributed ledger) technology behind Bitcoin could revolutionise how financial transactions are done and have a positive impact on business globally. This potential must be viewed separately from the risks of Bitcoin.’

‘The global accountancy profession has an important role to play in enabling stable economies and secure societies where consumers are not exploited. As new technologies become adopted, it is vital that professional accountants develop their digital understanding alongside their ethical responsibilities to flag areas of concern.

Commenting on the potential misuse of the currencies for criminal proceeds, Aidan Clifford, Technical Director, ACCA Ireland said, “The historical prevalence for money laundering across the border makes Ireland particularly at risk to crypto currencies byproviding a clear route toenabling the proceeds of crime to go undetected.  Hard fought controls over banking, accounting, auctioneering, solicitors and dealers in high value goods has made laundering the proceeds of crime very difficult in Ireland and this has directly resulted in crime detection and prevention. 

“Crypto currency could bypass all the current controls and with the pending challenges of Brexit, it could set crime detection back 20 years.   As an important line of defence it is incumbent upon all accountants to be informed and knowledgeable about the evolution of these evolving assets.”

Maggie McGhee, Director of Professional Insights at ACCA added,

‘ACCA supports a close relationship between regulators and the accountancy profession to ensure that a robust regulatory approach is crafted, and refined as developments emerge, so that it is fit–for–purpose in a digital age.