The National Crime Agency (NCA) seized £27m worth of cryptoassets during the last year, demonstrating how criminal activity remains a key use for cryptocurrencies despite growing adoption among institutions.
The NCA’s annual report linked cryptocurrencies to potential money laundering and highlighted the Russian invasion of Ukraine as a cause for concern for the illegal laundering of cryptoassets.
The government has yet to implement a fully robust regulatory system for cryptoassets. Much of its legal authority over digital currency is tied up with existing Anti Money Laundering regulations (ALMs).
Globally there have been signs of increased institutional regulation of crypto. The European Union agreed on a landmark law governing cryptoassets in July.
While the UK still has yet to deliver its own regulatory system, the British crime agency’s increased action in seizing digital assets suggests the government is starting to catch up to the technology.
The technology appeals to criminals because it is anonymous, but increasingly law enforcement agencies have found ways to trace transactions back to specific people.
Authorities develop ‘deeper understanding of cryptoassets’
“The NCA seizure of c.£27m of cryptoassets in 2021-22 shows that the UK’s criminal and regulatory authorities are developing a deeper understanding of cryptoassets and an appetite to take enforcement action where appropriate, said Michael Munk, managing associate in Linklaters’ dispute resolution team.
“This is consistent with the global trend where, after years of playing catch-up, law enforcement agencies are showing an increased aptitude for tracing and seizing stolen or laundered cryptoassets.”
Earlier this month, the Treasury Committee announced an inquiry into the role of crypto in the UK would be taking place. The inquiry’s goal is to explore the opportunities cryptoassets provide to the economy, whilst also determining the risks.
“Cryptoassets have the potential to bring new and innovative changes to the UK financial system, the economy and broader society,” said MP Mel Stride, chair of the Treasury Committee.
“However, there are also significant concerns around their use to launder funds, purchase illegal products, and evade international sanctions.”