UK Strengthens Cryptocurrency Regulation: Enforcement agencies can freeze or seize illicit crypto assets without conviction

The UK government has recently proposed a revised version of the Economic Crime and Corporate Transparency Bill for 2023, one provision of which would empower authorities to seize, freeze, or even destroy cryptocurrency assets linked to illegal activities without the need for prior arrest or conviction, in order to prevent individuals from evading legal sanctions by keeping assets overseas.

National Crime Agency to Have Power to Freeze or Confiscate Cryptocurrency Assets

The UK Parliament released amendments to the Economic Crime and Corporate Transparency Act on the 29th, significantly expanding the local law enforcement agencies' regulatory powers over cryptocurrencies.

The amendment allows the UK's National Crime Agency to freeze and seize cryptocurrency assets related to suspicious criminal activities without the need for a conviction, to prevent suspects from evading legal sanctions by keeping assets overseas.

Furthermore, authorities will be able to request cryptocurrency exchanges and custodial wallet providers to provide records of cryptocurrency assets belonging to suspected users, and when necessary, take measures such as freezing, recovering, or destroying cryptocurrency assets under the law.

The amended legislation will come into effect on April 26, streamlining legal procedures and enhancing law enforcement efficiency.

UK Chancellor of the Exchequer: Stablecoin Regulation Expected Within Six Months

Additionally, UK Chancellor of the Exchequer Bim Afolami previously mentioned at a cryptocurrency event hosted by Coinbase in London that the government is aiming to pass new stablecoin legislation before the upcoming election:

We want to get these things done as quickly as possible, and I think all of that is doable in the next 6 months.

The national election is expected to take place between the fourth quarter of this year and January next year.

What is the Economic Crime and Corporate Transparency Act?

It is reported that the act was initially proposed by the UK's National Crime Agency in September 2022 and passed in October last year, aiming to enhance authorities' ability to combat money laundering and fraud:

The new law will make it easier and faster for the National Crime Agency to freeze cryptocurrency assets and recover lost funds.

It also stated, "Organized criminals often use digital currencies like Bitcoin for money laundering, to obscure illegal profits from fraud, drugs, and cybercrime."

However, concerning Bitcoin specifically, its resistance to censorship should make it easier to trace and track illicit funds.

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UK Focuses on Investor Protection and Comprehensive Regulation

As cryptocurrency activities in the UK continue to grow within Europe, becoming a major cryptocurrency economy globally, the country is making considerable efforts in investor protection and combating illegal uses of cryptocurrencies.

Specifically, this includes the effective Financial Services and Markets Act FSMB that came into effect last June, the Cryptocurrency Financial Promotion Guidance published in November, and the upcoming stablecoin regulation legislation.

Additionally, the National Crime Agency has released recruitment notices for cryptocurrency investigators, offering an annual salary of $51,000 to $55,000, planning to establish a professional digital asset team responsible for investigating and tracking relevant criminal cases.

All these actions provide guidance for cryptocurrency companies operating in the UK, promoting digital financial innovation in the country while ensuring adequate protection for investors.