- The UK is withdrawing from its widespread requirement for crypto firms to submit personal information on all transfers made to non-hosted wallets.
- The Treasury report acknowledged industry concerns over privacy.
- The UK’s stance differs from that of the European Union, which in March decided to outlaw transfers in anonymous wallets.
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The UK Treasury has decided to revoke its requirement for crypto companies to compile personal information of self-detained wallet users, citing privacy concerns.
Wallets not hosted for “lawful purposes”
The government of the United Kingdom will not require crypto businesses to collect personal data for all transfers to non-custodial wallets.
Its June. In report good, the Treasury acknowledged that “many people who hold cryptocurrency for lawful purposes use unhosted wallets” and that no “good evidence” shows that such wallets are used for criminal activity. being done unevenly. It would therefore only expect crypto businesses to collect personal information for “transactions identified as having a high risk of illicit finance”.
The decision to update the anti-money laundering rules was taken based on feedback received in consultation with regulators, industry leaders, academia, civil society and government bodies.
The Treasury previously indicated that crypto transfers would fall under Financial Action Task Force (FATF) standards, meaning that both the originator and recipient of transferred funds would need to be identified by crypto firms.
The measure was dropped due to concerns over privacy, feasibility, and short- and long-term costs. Some of the consultants suggested using zero-knowledge proof technology to “demonstrate due diligence checks to clients” while avoiding sharing of personal information.
The recommendations of the Treasury report will be implemented in September 2022 after parliamentary approval.
Anti-anonymity laws have been passed this year in several legislative bodies, including the European Parliament. voted On outlawing anonymous crypto transactions in March. The government of Lithuania has also recently imposed Complete ban on “anonymous wallets”.
Disclosure: At the time of writing, the author of this article owns ETH and several other cryptocurrencies.