UK Government Plans to Increase Regulation of Crypto Assets to Combat Economic Crime
The United Kingdom’s government has announced plans to increase regulation of crypto assets as part of its efforts to combat economic crime in the country. The policy paper released on March 30 by the U.K. Treasury and Home Office stated that the government plans to “robustly” regulate crypto to fight the illicit use of digital assets.
This move towards stricter regulation of cryptocurrencies is part of the government’s economic crime plan for the period from 2023 to 2026. The plan also includes pooling “the knowledge and abilities of law enforcement agencies” to review and strengthen how crypto assets involved in legal proceedings may be seized and stored.
We’re coming for the corrupt elites and criminals that abuse our financial system.
New measures announced today to tackle economic crime 👇https://t.co/I4S4lYlwyx pic.twitter.com/zQU4VV6g6D
— Home Office (@ukhomeoffice) March 30, 2023
The U.K. government acknowledges that cryptoassets provide a near-instant and low-cost way to transfer value across borders. While the vast majority of cryptoasset transfers are conducted for valid purposes, they are also an attractive technological enabler for criminal activity. Intelligence demonstrates growing criminal acquisition and abuse of cryptoassets linked to a wide range of predicate offences, alongside their widespread adoption by money launderers and International Controller Networks (ICN).
The paper also highlights the difficulty in determining the proportion of illicit crypto addresses and transactions due to a number of factors, including the pseudo-anonymous and transnational nature of cryptoassets and services, and the under-reporting of crimes involving cryptoassets.
According to the policy paper, the U.K. government expects criminals to shift their crypto transactions to “less regulated exchanges and services” in other jurisdictions. Therefore, the country’s Financial Conduct Authority (FCA), which is one of the bodies responsible for the enforcement of crypto asset regulation, will be working with its international counterparts to exchange information related to its response on the regulation and supervision of crypto.
The U.K. government also recognizes that the developments within the cryptoasset industry are fast and constantly evolving. Hence, continued collaboration with the country’s cryptoasset sector is vital to ensure that the regulatory and supervisory system takes a targeted and proportionate approach to economic crime risks, fostering safe and competitive growth.
This staged and proportionate approach to regulation recognizes that, while challenging, effective cryptoasset regulation benefits everyone, including consumers and firms. The government plans to set out ambitious plans to protect consumers and grow the economy by robustly regulating cryptoasset activities, providing confidence and clarity to consumers and businesses alike.
In conclusion, the U.K. government’s move towards stricter regulation of crypto assets is a step in the right direction towards combating economic crime. While the cryptoasset industry provides a near-instant and low-cost way to transfer value across borders, it is also an attractive technological enabler for criminal activity. Stricter regulation will help protect consumers and businesses while fostering safe and competitive growth in the industry.
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