The British government has drawn up plans to increase regulation of crypto assets in response to economic crime in the country.
In a policy paper published on March 30, the U.K. Treasury and Home Office said they plan to “robustly” regulate cryptocurrencies to combat the illicit use of digital assets. The regulatory focus is part of the government’s 2023-2026 Economic Crime Plan, which also includes bringing together “the knowledge and capabilities of law enforcement agencies” to review and strengthen how crypto assets involved in legal proceedings are seized and stored.
“These steps will be in line with our ambition to make the UK an attractive world destination for crypto assets and crypto asset innovation,” the plan said. “Although challenging, effective crypto asset regulation benefits everyone , including consumers and companies.” According to the policy paper, the U.K. government said it wanted criminals to move their cryptocurrency transactions to "less regulated exchanges and services" in other jurisdictions. The country’s Financial Conduct Authority (FCA) one of the enforcement agencies for crypto asset regulation will work with its international counterparts to exchange information related to its response to crypto regulation. According to the paper: “Based on estimates of UK transaction volumes, the [National Crime Agency’s] National Assessment Center assesses that UK-related illicit crypto-asset transactions in 2021 could amount to at least £1.24bn (approximately 1% of total transaction value), of which their The real possibility is much higher."
As part of its action plan, the government said it planned to implement the FATF travel rule in coordination with agencies and pass the Economic Crime and Corporate Transparency Bill by the end of the fourth quarter of 2023. Other goals include improving communication between the FCA and cryptocurrency firms by the second quarter of 2024. While the UK appears to be responding to cryptocurrencies on a number of fronts, from enforcement to regulation, taxpayers in the country face their own reporting obligations. On March 15, the U.K. Treasury released a report announcing that it will revise the self-assessment form for crypto assets from the 2024-25 tax year.
