United Kingdom Will Not Require KYC for Unhosted Wallets

United Kingdom Will Not Require KYC for Unhosted Wallets

Key takeaways

  • The UK is backtracking on its blanket requirement for crypto companies to submit private info on all transfers made to unhosted wallets.
  • The Treasury report acknowledged trade considerations about privateness.
  • The UK’s stance differs from the EU, which determined in March to outlaw transfers to nameless wallets.

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The UK Treasury has determined to rescind its requirement for crypto corporations to compile the non-public info of self-custodied pockets customers, citing privateness considerations.

Unhosted wallets for “professional functions”

The UK’s authorities will not be requiring crypto companies to gather private information for all transfers to non-custodial wallets.

In its June report, the Treasury acknowledged that “many individuals who maintain cryptoassets for professional functions use unhosted wallets” and that no “good proof” reveals such wallets getting used disproportionately for felony exercise. It would due to this fact solely count on crypto companies to gather private info for “transactions recognized as posing at elevated danger of illicit finance.”

The choice was made based mostly on the suggestions the Treasury acquired from its session with regulators, trade leaders, academia, civil society, and authorities our bodies with regards to updating money-laundering rules.

The Treasury had beforehand indicated crypto transfers would fall below Monetary Motion Process Drive (FATF) requirements, which means that each originator and recipient of transferred funds would have to be recognized by crypto companies.

The measure was dropped resulting from considerations about privateness, feasibility, and short- and long-term prices. A few of these consulted steered utilizing Zero-Data Proof know-how to “show buyer due diligence checks had been carried out” whereas avoiding the sharing of non-public info.

The suggestions within the Treasury’s report will probably be carried out in September 2022 following parliamentary approval.

Anti-anonymity legal guidelines have been handed in a number of legislative our bodies this 12 months, with the European Parliament having voted on outlawing nameless crypto transactions in March. Lithuania’s authorities additionally just lately imposed a blanket ban on “nameless wallets.”

Disclosure: On the time of writing, the creator of this piece owned ETH and several other different cryptocurrencies.

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