U.K. to Tighten Crypto Regulations as Part of Economic Crime Plan

The United Kingdom Treasury and Home Office are planning to tighten regulations around digital assets in order to better protect consumers from economic crimes in the country.

The U.K. government announced its plans in its three-year Economic Crime Plan published on 30 March, which noted that the Treasury and Home Office would “robustly” regulate crypto assets in order to reduce its use in illicit transactions. The goal of the 2023-2026 economic crime plan is to make the U.K. “an attractive destination for cryptoassets and cryptoasset innovation in the world”. The policy paper reads:

“The government will set out ambitious plans to protect consumers and grow the economy by robustly regulating cryptoasset activities – providing confidence and clarity to consumers and businesses alike. These steps will be in keeping with our ambition to make the UK an attractive destination for cryptoassets and cryptoasset innovation in the world.”

The government will first pool the knowledge and abilities of its law enforcement agencies in order to review how to seize and store digital assets involved in legal proceedings. Other crypto-related goals of the plan include reducing fraud and money laundering, recovering criminal assets, combatting kleptocracy, and driving down evasion of sanctions.

The U.K. government expects that the new policy change will force criminals to move their crypto transactions to “less regulated exchanges and services” in other jurisdictions, and as such the Financial Conduct Authority will start working with its international counterparts to exchange information regarding regulation and supervision of crypto.

The paper noted that the policy change was needed as the National Crime Agency had estimated that illicit crypto asset transactions linked to the U.K. in 2021 likely equated to at least £1.24 billion ($1.5 billion) — about 1% of total transaction value — “with a realistic possibility they were significantly higher”.