The government of the United Kingdom has laid out plans to step up regulation of crypto assets in its efforts to respond to economic crime in the country.
In a policy paper released on March 30, the U.K. Treasury and Home Office said it planned to “robustly” regulate crypto to fight illicit use of digital assets. The focus on regulation was part of the government’s economic crime plan from 2023 to 2026, which also included pooling “the knowledge and abilities of law enforcement agencies” to review and strengthen how crypto assets involved in legal proceedings may be seized and stored.
“These steps will be in keeping with our ambition to make the U.K. an attractive destination for cryptoassets and cryptoasset innovation in the world,” said the plan. “Challenging as it is, effective cryptoasset regulation benefits everyone, including consumers and firms.”
We’re coming for the corrupt elites and criminals that abuse our financial system.
— Home Office (@ukhomeoffice) March 30, 2023
According to the policy paper, the U.K. government said it expected criminals to shift their crypto transactions to “less regulated exchanges and services” in other jurisdictions. The country’s Financial Conduct Authority, or FCA — one of the bodies behind the enforcement of crypto asset regulation — will be working with its international counterparts to exchange information related to its response on the regulation and supervision of crypto. According to the paper:
“The [National Crime Agency]’s National Assessment Centre assesses that based on estimates of UK transaction volumes, illicit cryptoasset transactions linked to the UK in 2021 likely equated to at least £1.24 billion (~1% of total transaction value) with a realistic possibility they were significantly higher.”
As part of its plan of action, the government said it planned to coordinate with various agencies to implement the Financial Action Task Force’s Travel Rule as well as pass the Economic Crime and Corporate Transparency Bill by the end of the fourth quarter of 2023. Other goals included improving communications between the FCA and crypto firms in the second quarter of 2024.
While the U.K. seems to be pursuing a response to crypto on multiple fronts — from law enforcement to regulation — taxpayers in the country face their own reporting obligations. On March 15, the U.K. Treasury released a report announcing it would amend the self-assessment forms for crypto assets starting for the 2024–25 tax year.