The United Kingdom has decided to embrace the opportunities afforded by Bitcoin with an announcement Wednesday that it will seek to regulate Bitcoin exchanges.

The announcement, which came as part of the 2015 Budget, is part of a push by the U.K. government in its own words “to apply anti-money laundering regulation to digital currency exchanges in the UK, to support innovation and prevent criminal use.”

The measures will be aimed at creating the right environment for legitimate actors in the space to flourish while making it “a hostile environment for illicit users of digital currencies,” the government added.

Along with the intention to regulate, the government has committed £10 million ($14.73 million) to “address the research opportunities and challenges for digital currency technology.”

Although in part cloaked in a typical law-and-order-style statement about cracking down on money laundering, regulation of Bitcoin exchanges has been welcomed by market participants.

Bitcoin vault Elliptic co-founder Tom Robinson told Reuters that the new regulation effectively served as a “stamp of approval” from the government.

“It provides enough oversight to provide legitimacy without stifling innovation,” he said. “I think it is a good balance between, on the one hand the U.S. and specifically New York, which I think have gone too far, and what a lot of countries are doing which is just completely ignoring it.”

The announcement as part of the Budget follows promises from British Chancellor of the Exchequer George Osborne in August 2014 that he wanted to see London become the Bitcoin capital of the world.

“It’s only by harnessing innovations in finance, alongside our existing world-class knowledge and skills in financial services, that we’ll ensure Britain’s financial sector continues to meet the diverse needs of businesses and consumers, here and around the globe, and create the jobs and growth we all want to see in the future” he said at the time.

A silver bullet and garlic to Bitcoin scammers

A key strength of the arguments for regulating Bitcoin exchanges, beyond the obvious benefits of giving the cryptocurrency more legitimacy, is that it helps slow down the opportunities Bitcoin scammers have with their dodgy exchanges. From Mt. Gox through to Egopay, and more than a few in between, early adopters in Bitcoin have faced undue risks in the space due to a lack of regulation; put simply, they don’t know who they’re dealing with, as currently every man and his dog can set up a Bitcoin exchange with zero oversight.

Regulated Bitcoin exchanges, like regulated banks and other financial institutions, will prove security for investors and users alike and are a key element for the growth of Bitcoin going forward.

photo credit: UK – 11 – Big Ben and Westminster Hall via photopin (license)