- A new law will allow UK authorities to freeze crypto assets used in crime without requiring a conviction.
- UK authorities will be able to retrieve crypto assets directly from exchanges and custodian wallet providers. They will also have the option to destroy crypto assets if needed.
The United Kingdom government recently released a new statutory instrument that significantly broadens the scope of law enforcement’s authority to combat crypto-related crimes. Coming into effect at the end of April, this groundbreaking legislation permits UK law enforcement to freeze cryptocurrency assets linked to criminal activities without the prerequisite of a conviction. This development was detailed in documentation published on Feb 29, amending the Economic Crime and Corporate Transparency Act 2023.
NCA has fewer restrictions when seizing crypto
The National Crime Agency (NCA) now wields expanded powers to confiscate and seize cryptocurrencies suspected of being involved in illicit activities such as cybercrime, scams, and drug trafficking. This marks a pivotal shift from the traditional approach, eliminating the need for extensive legal procedures to act against suspicious assets. Moreover, the legislation enables authorities to directly access and retrieve crypto assets from exchanges and custodian wallet providers, with a provision even to destroy these assets if deemed necessary. While specifics on the destruction process were not provided, the common practice involves “burning” the tokens by transferring them to an address from which they cannot be retrieved, effectively removing them from circulation.
Set to be enforced starting Apr 26, the statute represents a significant step forward in the UK’s efforts to clamp down on the misuse of digital currencies for criminal purposes. The initiative reflects growing concerns over the challenges posed by the anonymity and borderless nature of cryptocurrencies, which can facilitate illegal activities.
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The difficulties of tracking crypto assets
However, the effectiveness of UK authorities in handling crypto-related crimes has been called into question. A British national, who fell victim to a crypto scam losing approximately $46,000, criticized the authorities for their alleged inadequacy in addressing such crimes. This incident underscores the complexities and difficulties in tracking and recovering stolen digital assets.
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The upcoming new laws
Amid these regulatory advancements, the UK government is also setting its sights on introducing new laws to regulate stablecoins and crypto staking within the next six months. At a Coinbase-hosted crypto event in London on Feb 19, Economic Secretary to the Treasury Bim Afolami revealed the government’s ambition to finalize these regulations before the forthcoming election, scheduled no later than Jan 28,2025.
