The UK government has taken significant steps to regulate the crypto asset industry and enhance its ability to combat financial crime. The recently passed Economic Crime and Corporate Transparency Bill and the Financial Conduct Authority (FCA) aim to establish a robust framework for crypto asset businesses operating in the country.
UK Government Legislation and Seizure of Cryptocurrencies
The Economic Crime and Corporate Transparency Bill passed a third reading in the House of Lords. This legislation empowers authorities to seize cryptocurrencies associated with financial crimes. By expanding jurisdiction and granting the ability to confiscate digital currencies involved in activities like terrorism financing, the government aims to tackle the illicit use of cryptocurrency.
The anonymity and P2P nature of cryptocurrency transactions has posed challenges in detecting and prosecuting wrongdoers, making this legislation crucial for combating financial crimes effectively in the UK.
Concerns and the Path to Royal Assent
UK authorities have highlighted crypto assets’ attractiveness as enablers for criminal activities. The National Assessment Center Association estimates that illicit crypto transactions in the UK amounted to approximately $1.5 billion in 2021, with the actual figures potentially being even higher.
The Economic Crime and Corporate Transparency Bill is currently undergoing the “Consideration of Amendments” stage, where both the House of Commons and the House of Lords can propose changes to reach a mutual agreement on the legislation. Once this process is complete, the bill will require royal assent from King Charles III before becoming law.
FCA’s Compliance Requirements
In parallel with the legislative developments of the transparency bill, the FCA has reminded all domestic firms marketing cryptocurrencies to UK consumers to adhere to the designated promotion regime.
Effective October 8, 2023, this regime will bring crypto asset businesses under the scrutiny of the FCA. Compliance with anti-money laundering requirements and obtaining authorization from an approved person are mandatory for digital asset firms. Failure to comply can result in severe penalties, including imprisonment and fines.
Conclusion
The UK government’s legislative efforts and the FCA’s promotion regime signify a strong commitment to regulating the crypto industry and combating financial crime. The Economic Crime and Corporate Transparency Bill’s progress through the House of Lords demonstrates the determination to address illicit cryptocurrency-related activities.
By imposing strict compliance requirements on crypto asset businesses, the FCA aims to ensure consumer protection and maintain the financial system’s integrity. As these measures take effect, the UK continues its journey toward a well-regulated crypto ecosystem that balances innovation with security.
