The United Kingdom’s National Crime Agency (NCA) and police have been granted expanded authority to deal with cryptocurrency used for illicit activities, including the power to “seize, freeze, and destroy” such digital assets.
Under the new regulations, law enforcement in the UK will no longer need to make an arrest prior to confiscating crypto holdings.
In a statement released by the UK Home Office, it was disclosed that police can now also seize materials such as passwords or memory sticks that could assist in ongoing investigations.
Additionally, UK law enforcement will have the capability to eliminate a crypto asset if reintroducing it into circulation is deemed harmful to the public interest.
Effective from April 26, the new laws authorize the police to transfer seized illicit cryptocurrency to wallets under their control, with provisions for crime victims to seek reimbursement from their crypto accounts.
UK Home Secretary James Cleverly emphasized the necessity of preventing criminals from profiting from illegal activities, citing the use of cryptocurrency fundraising by various groups as a key driver behind the introduction of these enhanced police powers.
Cleverly underscored the potential national security implications, citing instances where terrorist organizations like Daesh have been known to finance their operations through crypto transactions, highlighting the importance of enabling agencies to more effectively strip them of their assets.
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The enactment of these regulations follows the passage of a crime bill by the UK parliament in 2023, which facilitated the swift seizure of cryptocurrency assets.
Privacy coins were singled out in the press release as being particularly detrimental to the public good.
While cryptocurrencies like Bitcoin (BTC) and Ether (ETH) offer pseudo-anonymity through public ledgers, privacy coins afford users a higher degree of anonymity.
Despite the anonymity associated with wallet addresses, it was noted that once linked to an individual’s identity through procedures like Know Your Customer (KYC), all transactions conducted through that wallet can be traced and identified.
The announcement acknowledged that cryptocurrencies and nonfungible tokens (NFTs) have been exploited by drug dealers and fraudsters, leading to various investigations.
However, the new measures aim to curtail the exploitation of crypto for illicit purposes while fostering its legitimate potential to drive economic growth.
This concerted effort to regulate crypto is not unique to the UK, as evidenced by recent actions taken by law enforcement globally, including the arrest of the founders of Bitcoin mixer Samourai Wallet in the United States on charges of conspiracy to commit money laundering on April 24.
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