UK Government Amends Controversial Law Seeking Details of Private Crypto Wallets

In an amendment, the law now only directs private crypto wallet providers to flag details of those transactions that seem suspicious.

By Radhika Parashar | Updated: 21 June 2022 17:53 IST

UK Government Amends Controversial Law Seeking Details of Private Crypto Wallets

Photo Credit: Pixabay/ Butti_s

UK legalised stablecoins as payment options in April

Highlights

Original law was proposed by UK Treasury
Law was intended to track suspicious crypto transactions
UK continues to work on shaping its crypto sector

After facing backlash on social media, the government of UK has decided to roll back a controversial law, that aimed at collecting personal information from private crypto wallets. This law was announced by the UK Treasury Office last July. Focussed on establishing consistency across all financial systems, including cryptocurrencies, the law proposed that private crypto transactions will have to collect the details of the recipients of GBP 1,000 (roughly Rs. 95,000). Social media reflected retaliation around this law, which may have been one of the reasons behind its withdrawal.

In an amendment, the law now only directs private crypto wallet providers to flag details of those transactions that seem suspicious.

"Instead of requiring the collection of beneficiary and originator information for all unhosted wallet transfers, crypto asset businesses will only be expected to collect this information for transactions identified as posing an elevated risk of illicit finance,” the amended document.

The people seem to have heaved a sigh of relief now that this intrusive law has rolled back.

Good! I swear these governments are going to ruin such beautiful technological ideas :face_with_rolling_eyes:
— Lux-tuxedo (@TuxedoLux) June 20, 2022

Progressive move by the UK. I'm delighted to see the UK did not follow EU's example on imposing onerous and unnecessary restrictions/ checks on unhosted (private) digital wallets. Fiscal freedom and privacy are individual rights that need to be protected in the crypto-economy. https://t.co/Bq5xS2sTK9
— Flavia Kenyon (@FlaviaKenyon) June 21, 2022

At the time this law came into existence almost a year ago, it was aimed at curbing chances of money laundering and terror funding.

UK wanted to ensure that all crypto funds must be identified distinctively, a report by The Block noted.

The country has recently included cryptocurrencies into their official financial systems.

In April, stablecoins were recognised as an[official mode of payment in the UK. Stablecoins, like Tether and Binance USD, are crypto assets pegged to reserve assets like gold or fiat currencies. So, even if the crypto market is down, they can still see gains due to the performance of its underlaying asset.

The British government is looking to establish a financial market infrastructure (FMI) called the 'Sandbox' that will enable firms to experiment and innovate in providing the infrastructure around crypto services.

New legislation announced today will allow us to deliver a Financial Market Infrastructure Sandbox by 2023.

This will enable firms to explore the potentially transformative benefits of the distributed ledger technology that underpins financial markets. pic.twitter.com/tSlmwwaLvo
— HM Treasury (@hmtreasury) April 4, 2022

Previously, the Bank of England (BoE) requested that special heed should be paid on trimming down risks of crypto misuse for financial distortion, money laundering, and other illicit activities that these decentralised and mostly untraceable virtual assets are capable of facilitating.

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Further reading: Cryptocurrency, Crypto Wallet, UK

Radhika Parashar

Email Radhika

Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More