Crypto Crackdown: UK Eyes Proactive Crypto Seizures

March 02, 2024

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The United Kingdom is gearing up to bolster its crypto seizures law enforcement capabilities in combating cryptocurrency-related crimes, including those associated with terrorism, as provisions from a 2023 law edge closer to implementation, set to take effect on April 26.

The move to clamp down on the illicit use of the anonymity of crypto by criminal groups has been ongoing for some time now since the bill was first presented in September 2022, and one year after, the legislation got a nod from the House of Lords, the secondary legislative body in the UK Parliament.

UK Enforcement on Crypto Seizure

Following the passage of the Economic Crime and Corporate Transparency Act 2023, which granted law enforcement agencies the authority to seize and freeze cryptocurrency assets linked to criminal activities, secondary legislation approved this week paves the way for the actualization of these enhanced powers.

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The imminent enforcement of key measures outlined in the 2023 act includes the implementation of a specialized civil recovery system for cryptocurrency assets. Furthermore, the law introduces orders for confiscating crypto assets, granting authorities the power to seize items linked to cryptocurrencies, defined as property or information aiding in such seizures.

This move signifies a significant step forward in the UK’s efforts to address the challenges posed by illicit activities facilitated by cryptocurrencies. By equipping law enforcement with the necessary tools and authority to seize and freeze crypto assets, the government aims to enhance its ability to combat financial crimes and safeguard the integrity of the financial system.

UK’s Journey to Regulate Crypto Assets

The UK government had in October of 2023 released a comprehensive final proposal for regulating digital assets and associated offerings within the region in response to the United Kingdom Treasury’s consultation on establishing a streamlined regulatory framework for crypto assets.

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The proposal revealed the government’s aim to subject certain crypto-related activities to financial services regulation, emphasizing that firms engaging with UK retail consumers must obtain authorization regardless of their geographical location.

Earlier Restrictions on VASP in UK

There was an earlier crackdown on Virtual Asset Service Providers (VASPs) operating in the UK when the UK’s Financial Conduct Authority (FCA), declared that crypto asset firms were now obligated to comply with the Financial Action Task Force (FATF) Travel rule, marking a significant advancement in the realm of digital assets.