On June 20, the UK government withdrew from its plans to collect personal information from private cryptocurrency wallets. This step has been taken due to the uncertainty surrounding cryptocurrencies.
The UK Treasury office issued a consultation paper on cryptocurrencies in July 2019, stating that financial norms should be applied across all financial services, including cryptocurrency. However, the call for users to provide their personal information came under fire from privacy and data protection watchdogs.
According to the draft, “People who wanted to transmit money to private crypto wallets would need to obtain the recipient’s personal information.” This was a reference to the Financial Action Task Force (FATF) guidelines, which would facilitate authorities’ tracking down criminals and those involved in money laundering, including those exploiting the anonymity of cryptocurrencies for nefarious purposes.
Data protection authorities expressed that the request to have access to personal information on the blockchain went against European laws and undermined a major benefit of cryptocurrencies.
The authorities have set some levels for specific transactions. As per the July 2021 draft indicated, £1,000 would need little reporting under this rule. Anything exceeding this level necessitates the sender providing additional personal information about the recipient.
According to the amendment release on Monday, “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.”
