According to a recent paper, the UK government has rejected the EU parliament’s controversial crypto data collecting program. The UK Treasury consulted numerous stakeholders before deciding to preserve investors’ privacy.
The United Kingdom will not track cryptocurrency data from unhosted wallets
The UK government is revising its position on unhosted wallet monitoring, according to a recent document titled Amendments to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 Statutory Instrument 2022. “Instead of requiring the collection of beneficiary and originator information for all unhosted wallet transfers, crypto-asset businesses will only be expected to collect this information for transactions identified as posing an elevated risk of illicit finance,” document released by the UK Treasury. Unhosted wallets are non-custodial or private wallets.
According to the survey, most people who use unhosted wallets hold digital currencies for legal reasons. Private wallets are not used for criminal activity, according to the evidence. Therefore, crypto firms should only collect personal information for “transactions regarded as posing an enhanced risk of criminal finance.”
The Treasury stated that the Financial Action Task Force would regulate crypto transactions. As a result, each transaction over £1000 would result in crypto firms collecting personal data from the sender and recipient. This was done to prevent money laundering and the financing of terrorists.
On the other hand, crypto stakeholders have raised reservations about the plan, including privacy concerns. After consulting with stakeholders such as regulators, industry leaders, civic society, academics, and other government agencies, the Treasury came to this determination. Some people I spoke with proposed using ZK proofs to do due diligence without disclosing the actual information.
The European Parliament has approved it
The UK government’s moves come just months after the European Parliament approved the legislation in March. According to sources, the idea was supported by more than 90 members of the European Parliament. Previously, the tracking threshold was set at £1000, but the government hoped to eliminate it, allowing all transactions to be tracked.
Various stakeholders were not pleased with the EU’s revision, with many voicing their opinions and raising privacy concerns. For example, Brian Armstrong, the CEO of Coinbase, called the regulation anti-innovation, anti-privacy, and anti-law enforcement. Such measures are neither warranted nor proportionate, according to other members of this parliament.
Other regulatory organizations appear to follow in the EU parliament’s footsteps. Lithuania, for example, announced measures to prohibit private wallets earlier this month.
The Crypto War Zone in the United Kingdom
The UK has been a regulatory battleground in the crypto industry for years. Regulatory bodies have been continually enacting legislation to impede the operation of crypto, exchanges, and ATMs. On the other hand, this recent judgment is good news for privacy-conscious crypto investors.