In contrast to a proposal adopted by the European Union in March, the United Kingdom will not force senders of crypto assets to collect information about receivers who use unhosted wallet addresses.
“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,” according to a document issued by the Treasury Following feedback from a wide range of responders, including academics and industry experts, the conclusion was made.
The revelation may be a sigh of relief for the crypto community’s privacy-focused section, many of whom came out against the EU’s measure.
Coinbase CEO Brian Armstrong labelled it “anti-innovation, anti-privacy, and anti-law enforcement” at the time, while also highlighting the onerous obligations imposed on individuals.
Many of the UK government’s consultants appeared to agree with Armstrong, according to a study released last week by the Treasury. The burden of enforcing the possible reporting requirement would “disproportionately” outweigh its usefulness in combating illicit transactions, according to opponents.
Those in favour of the regulation said that transfers between any parties should be as visible as transfers between crypto asset enterprises, and that “unhosted wallet” transactions posed a greater danger. The government, on the other hand, disagrees, claiming that there is “no proof” that unhosted wallets pose an undue risk.
the government stated,“Many persons who hold crypto assets for legitimate purposes use unhosted wallets due to their customizability and potential security advantages.”