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United Kingdom Makes a U-Turn on Crypto Data Collection Plans

Cryptocurrency Jun 21, 2022 07:31AM ET
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United Kingdom Makes a U-Turn on Crypto Data Collection Plans

Government officials of the United Kingdom have announced that they will not require senders to collect information about unhosted crypto wallets. In 2021, UK Treasury officials released a preliminary report outlining that financial institutions should practise the same monetary standards across all financial services⁠—including crypto.

Consolidation for Proposed Tracking of All Recipients

The initial proposal included the requirement for senders to collect information about the intended beneficiary, including for transactions below the threshold of £1,000, in which case crypto wallets of the anonymous nature would have to undergo a short KYC process. For transfer amounts higher than £1,000, both the sender and the recipient would be required to go through a more complex process involving the provision of additional information. In light of recent news coming from the island nation, this will no longer be the case as the UK government has ruled that the measures would create unnecessary obstacles to the industry’s growth.

The legislation was initially proposed in order to comply with the standards set by the Financial Action Task Force (FATF), but the revised report now states that “instead of requiring the collection of beneficiary and originator information for all unhosted wallet transactions, crypto asset businesses will only be expected to collect this information for transfers identified as posing an elevated risk of illicit finance”.

UK Aspires to Become a Crimeless Crypto Hub

The United Kingdom’s recently indicated its ambitions, staking its intention to become an attractive global crypto hub. The UK’s Under-Secretary of State for tech and the Digital Economy Chris Philp stated: “Of course we’ve got to do that in a way that protects the public and in particular pays attention to issues concerning for example money laundering, and making sure that crypto is not used as a way to circumvent things like sanctions”.

The EU Takes a Different Stance on Anonymous Wallets

In stark contrast, the European Union introduced anti anonymity laws in March, banning all unhosted crypto wallets. The EU is seeking to create a standardized set of regulations for crypto on the continent, though many member states, notable examples being Cyprus and Portugal, are trying to pre-empt such EU crypto rulings by implementing their own national laws before the union-wide crypto bill takes hold.

The independent measures taken could be a result of the friction caused by the different stances towards crypto held among the member states. For instance, Lithuania decided to stamp out anonymous wallets via a blanket ban, in accordance with EU regulations, but it is unlikely that crypto friendly hubs in the EU such as Malta or Cyprus would be willing to walk the same path.

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United Kingdom Makes a U-Turn on Crypto Data Collection Plans
 

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