Blockchain & Crypto

UK Government to Fight Illicit Crypto Use

The UK Treasury and Home Office released a policy paper focusing on ‘robust’ crypto regulation as part of the government’s plan to fight economic crime

UK Government to Fight Illicit Crypto Use

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Economic Crime Plan 2 to be implemented within 2023-2026 was released by the UK HM Government on March 30. It includes plans to enhance the regulation of crypto assets in order to respond to economic crime nationwide.

Although the agency acknowledges that “the vast majority of cryptoasset transfers are conducted for valid purposes”, crypto is also “an attractive technological enabler for criminal activity” with the possible ways to obscure the nature and participants of an illicit transaction.

The steps needed to tackle illicit crypto use will involve close cooperation with law enforcement agencies to strengthen the procedure of seizing digital assets from criminals and storing them. Besides, the UK Financial Conduct Authority (FCA) will collaborate with its international counterparts to exchange information related to its supervision of crypto transactions.

Furthermore, the government plans to coordinate with various agencies in the implementation of the Financial Action Task Force’s Travel Rule. It also aims to pass the Economic Crime and Corporate Transparency Bill by the end of Q4 2023.

To properly respond to the enhanced regulation, the FCA wants to improve communications between the government and crypto firms in Q2 2024.

The National Crime Agency’s National Assessment Centre estimates that illicit crypto asset transactions linked to the UK in 2021 equalled at least £1.24 billion (~1% of total transaction value). Therefore, government agencies call for effective crypto asset regulation as soon as possible.

With the greater focus on combatting crypto-related crimes, the UK government expected criminals to shift their illicit crypto transactions to “less regulated exchanges and services” in other jurisdictions.

The UK, on the other hand, will get all the chances to become “an attractive destination for cryptoassets and cryptoasset innovation in the world.”

Earlier this month, the CryptoUK Trade Association sent a letter to the UK government expressing deep concern over the recent actions of banks to restrict purchases of cryptocurrencies.

Nina Bobro

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Nina is passionate about financial technologies and environmental issues, reporting on the industry news and the most exciting projects that build their offerings around the intersection of fintech and sustainability.