UK Crypto Regulation: Authorities Will No Longer Need Conviction to Freeze Crypto
Key Takeaways
- Major UK economic and crypto regulations come into effect from April 26, 2024.
- UK authorities will be able to confiscate ‘illicit’ crypto without conviction.
- Crypto scams have cost the UK billions since 2019, and this figure continues to rise.
As it works to establish more robust crypto regulations and curb cryptocurrency-related crimes, the UK government has introduced a new bill that grants law enforcement unprecedented legal powers.
According to the latest amendment to The Economic Crime and Corporate Transparency Act 2023, the National Crime Agency now has the expanded authority to freeze, seize, and destroy crypto assets connected with illegal activity without needing a conviction.
Enhanced Authority Over Crypto
The UK’s sweeping new economic crime legislation comes into force on April 26, 2024 , and will now include civil recovery orders for confiscating cryptocurrency assets, This includes being able to retrieve crypto from exchanges and custodian wallet providers.
UK authorities will now also be able to destroy crypto assets if necessary. Though their methodology isn’t outlined, presumably, they’ll leverage commonly-used ‘ burn wallets that remove coins from circulation.
Being able to recover crypto assets without arrest may be a cause of concern for some. But, it is intended to be used in situations where, for example, individuals are evading conviction by living in another country.
Adequate or Overbearing?
This is a rather pivotal piece of legislation that has broader implications for the crypto industry and users in the UK. Arguably, it raises questions on the balance of regulatory oversight and individual freedoms, and any perceived overreach could impede the ambitions of UK Prime Minister, Rishi Sunak, to turn the UK into a crypto hub.
There’s some frustration in the air as many UK banks no longer allow customers to interact with crypto, preventing them from investing with the likes of Coinbase, Binance, and others. Rhys King, co-founder of the crypto educational platform, 123Cryptos, posited his thoughts on Twitter.
On the other hand, it can be said that this is an adequate measure to deter the use of crypto in illegal activities, which could give investors and businesses greater confidence in the UK as a place to conduct crypto-related business and activities.
Unfortunately, the UK has been struggling to get to grips with the advances of crypto, digital asset technologies, and the methodologies of cyber criminals, which is reflected by the ever-increasing numbers of victims and money lost to crypto scams and frauds.
Crypto Scams Costing UK Investors
This latest development underscores the UK’s bid to catch up to crypto and blockchain technologies that, unfortunately, give cybercriminals frequently updated means of outpacing lawmakers.
As per data published by the UK House of Lords Digital Fraud Committee, as well as Freedom of Information requests , crypto-related frauds, and scams are rising, totaling over £4.5 billion in losses between 2019 and 2022.
In November 2023, UK-based Lloyds Bank published data that highlighted the need for powerful consumer protections around crypto, finding that crypto scams had increased by 23% in 2023. According to the report, the cost of a crypto scam is higher than any other type of consumer fraud, averaging at £10,741.
According to data provided to legal firm RPC by UK fraud and cybercrime watchdog, Action Fraud, this figure is even higher, with an estimated £306 million lost to crypto fraud between March 2022 and March 2023.
It’s important to note that these figures were achieved during a market downturn, and as the market begins to rise once more, so do illicit crypto activities. By mid-2025, we may see the impact the latest crypto legislation has in the UK, and hopefully, these figures stop increasing year-on-year.
