UK authorities reject proposal to regulate non-custodial wallets

The British government has supported the community’s backlash against the FATF’s rules and opposed the requirement to collect information on non-custodial wallets.

The UK government has not approved a proposal requiring the collection of sender and recipient data for any transaction between non-custodial wallets. Based on the feedback received, the UK Treasury does not consider it appropriate to implement data collection rules for non-custodial or private wallets.

Recall that in accordance with the standards of the Financial Action Task Force on Money Laundering (FATF), in order to prevent money laundering and terrorist financing using cryptocurrencies, it is necessary to identify the sender and recipient of transferred assets.

“Instead of requiring the collection of recipient and sender information, crypto companies are expected to collect this information only for transactions that are identified as presenting an increased risk of illegal financing,” the statement said.

In a consultation paper published last July, the UK Treasury said the rule for collecting information on users of non-custodial wallets should be applied consistently across the financial services industry “regardless of the technology used to facilitate transfers.”

“Firms dealing with crypto assets will have to put in place systems to ensure that information about the sender and recipient of a crypto asset is transmitted and received along with the transfer in the appropriate format,” the British regulator said.

Previously, a similar proposal in the United States drew backlash over concerns about whether some organizations using smart contracts with their own wallets would be able to comply with the requirements, and whether the data would be safe if it was stored by any random user.

U.S. Deputy Secretary of the Treasury Wally Adeyemo said earlier that for national security purposes, it is necessary to “look” into the non-custodial wallets of all users.