• UK police have been granted expanded powers to seize, freeze, and destroy cryptocurrency linked to criminal activities without the need for arrests.
• The new rules, effective from April 26, allow law enforcement to transfer seized illicit crypto to wallets under their control, and victims can apply to reclaim funds from these accounts.
• The UK government cited the use of cryptocurrencies by terrorist organizations and other criminal groups as the rationale behind these new police powers.
The UK government has recently expanded the authority of the police and National Crime Agency (NCA) to seize, freeze and destroy cryptocurrencies used by criminals. These new powers aim to prevent illicit uses of crypto while fostering its potential for legitimate economic growth.
New Rules Coming into Effect
The new rules will come into effect starting April 26th. Under the updated regulations, the police will no longer need to make an arrest before seizing crypto holdings linked to illegal activities.
Law enforcement will also be able to transfer seized crypto to wallets under their control. Victims of crimes can then apply to reclaim funds from these accounts.
Authorities Can Now Destroy Crypto Assets
Another key part of the new laws is that authorities can now eliminate a crypto asset if returning it to circulation is seen as harmful for the public good.
The regulations allow the destruction of cryptocurrencies like Bitcoin and Ethereum as well as non-fungible tokens. The government cited privacy coins specifically as being detrimental.
While most cryptocurrencies offer pseudo-anonymity, privacy coins provide a much higher level of anonymity. However, once a wallet address is linked to an individual through KYC, all associated transactions can still be traced.
Cracking Down on Criminal Fundraising
The expanded powers are intended to crack down on fundraising by criminal and terrorist organizations. The government stated that groups like ISIS are known to raise funds through crypto.
UK Home Secretary James Cleverly said that “criminals must not profit from illegal activities.” The new rules will help agencies more easily strip criminals of their crypto assets.
The additional authority comes after the passage of a 2023 crime bill in the UK parliament. The bill enabled the rapid seizure of cryptocurrencies linked to illegal activities.
