UK Abandons Plans To Monitor Unhosted Digital Wallets

The UK abandons the plans to monitor unhosted digital wallets while the EU parliament voted to approve a measure like this one three months ago so let’s read furhter in our cryptocurrency news.

The UK abandons plans that were proposed by the European Union and will not require senders of assets to collect information about the recipients that use unhosted digital wallet addresses. As per the document published by the Treasury, we can read that:

“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.”

The decision came after soliciting feedback from respondents including some academics and industry experts. The news could bring a sigh of relief for the privacy-oriented wing of the community with most of them speaking against the EU measures. Coinbase CEO Brian Armstrong called it anti-innovation and anti-law enforcement while noting that the requirements can be harsh on individuals. According to the reports from the Treasury, most of the UK government consultants appeared to agree with Armstrong, and some opponents of the requirements argued that the burden of imposing it will outweigh the effectiveness in tackling illicit transactions.

Those that are in favor of the requirements claimed that the transfers between any party ought to be as transparent as those between the crypto asset businesses deeming unhosted wallets transactions at higher risk. The government didn’t agree but cited that there’s no evidence of unhosted wallets that present a disproportionate risk:

“Many persons who hold crypto assets for legitimate purposes use unhosted wallets due to their customizability and potential security advantages (e.g. cold wallet storage).”

Unhosted wallets are such where an individual user controls the private keys rather than the exchange or trading platform. This gives users full control of the funds rather than requiring permission from a third party. The Canadian governemnt encountered some issues with unhosted wallets when about $1 million in BTC was transferred to Freedom Convoy protesters. Despite the bank freezing the accounts, authorities were only able to seize some of the donation funds.