Bitcoin’s momentum continues to grow as governments agencies have started to recognize that virtual currencies can co-exist alongside flat currencies. As well, Bitcoin thought leaders have continued to negotiate with law makers to overcome the present problems.

Many Bitcoin traders have been wondering how governments and other major organizations will react to virtual currency. So far, most governments including US have remained largely silent. The German government was first to labeled Bitcoin as a currency unit and private money. Recognition from one of the EU leading powerhouse marks next major step forward for the currency.

Bitcoin to become regulated in the UK?

In the latest development, UK Bitcoin companies had discussed with a number of financial technology companies, UK regulators and government members for regulating Bitcoin in Downing Street this week.

Tom Robinson, co-founder online Bitcoin exchange platform BitPrice, attended the 1.5 hour meeting and said that the regulator – which has until now watched the fast-growing currency from the sidelines – has taken a more active interest in recent weeks.

“The attendees ranged from crowdfunding companies to payment services businesses. There were also several representatives from the treasury, the FCA, the Number 10 Policy Unit, the Department for Business, Innovation and Skills and a few of the smaller banks,” he said.

He said in terms of regulation, the UK has been slow to act, while the US and Germany have issued guidance. BitPrice as a company will welcome UK government cooperation or involvement to regulate Bitcoin community.

“Guidance has been issued in Germany and the US, which has led to a lot of digital currency startups in those countries,” he said. “We think it should be appropriate legislation, but we also think it should be put in place fairly rapidly, otherwise the UK is going to lose out.”

Robinson said Financial Conduct Authority (FCA) is actively looking into virtual currencies and following in the footsteps of the US, regulators as how they should be regulated.

“The very broad point the FCA made was that it needs to balance the concerns and the security of consumers against the wish to increase competition in the financial services sector and to encourage innovation,” he said.

Soon after the meeting, FCA official said they are keen to move the dialog forward. “Whilst the FCA does not regulate Bitcoins, businesses providing services related to bitcoins, or other digital currencies, should consider whether they are carrying on regulated activities. As you would expect, the FCA does watch new developments in the market,” a spokesperson from the FCA said.

The bitcoin official recently met with US law makers to get some support amid growing attention to the world’s most popular virtual currency by law enforcement agencies and government financial institutions.

Banking regulatory issues

Many banks refuse to deal Bitcoin community involved in pseudo-anonymous currency due to money laundering fears. Fake hedge funds, efforts to steal from wallets, computer viruses, and rigged mining pools have all occurred in recent months as hackers have tried to take control through Bitcoin scams.

The New York Banking Commission recently started investigating Bitcoin industry in the concerns that virtual currency is used for money laundering and tax evasion purposes. The regulator investigation will clear the path for specific regulations for the Bitcoin industry.

Robinson believes the framework related to banking regulatory should be changed as the current mode is making it difficult to work with banks.

“The regulators’ current point of view is that it’s up to the banks – they can make a commercial decision not to work with a company. Although, companies at the meeting made the point that banks are making these ‘commercial decisions’ because of the regulatory framework imposed on them by the regulators. That framework should be changed,” he said.

UK bitcoin companies have started negotiating with regulators and meeting with banks to protect, promote and standardize bitcoin with a focus on the UK.