As a crypto investor with experience in law, I find the new seizure regime for cryptocurrencies in the United Kingdom to be a significant step backwards for individual civil liberties. The ability of authorities to seize crypto assets without an arrest or charge is a contentious issue that has long been debated in the UK. Although the intentions behind this change are to combat criminal activity, such as money laundering and drug trafficking, it sets a dangerous precedent for unjustified seizures.
Many people consider it an unjustified infringement or unjustifiable act when a government confiscates someone’s possessions without arresting or charging them with a crime. However, due to a law enacted in April, this is now a possibility for cryptocurrency holders in the United Kingdom.
As an analyst, I’d rephrase it this way: Starting April 26, I’m reporting that the Economic Crime and Corporate Transparency Act 2023 (ECCTA) amendments have taken effect, altering confiscation procedures under the Proceeds of Crime Act 2002 (POCA). Consequently, U.K. law enforcement agencies, including the police and National Crime Agency (NCA), now possess the authority to seize crypto assets from suspects without the need for an arrest.
In plain language, this modification grants law enforcement the ability to confiscate cryptocurrencies from individuals under suspicion of illegal activities. Additionally, they can take possession of related physical evidence such as USB drives and handwritten passwords for crypto investigations. Furthermore, they have the authority to permanently eliminate a digital asset if its restoration to circulation is deemed detrimental to the public interest.
How will crypto be ‘destroyed’? No one knows
The circular from regulators specifies when the authority to destroy certain assets can be used, yet it remains unclear how this destruction will be carried out in practice.
Criminal elements have employed cryptocurrencies for laundering ill-gotten gains for several years. Proponents of the newly proposed regulations argue that these measures could effectively curb some of this money laundering activity.
As a researcher examining the topic of cryptocurrency seizures by the police without criminal charges, I’ve come across a controversial practice that raises concerns over the presumption of guilt without sufficient evidence. In the U.K., civil asset seizures have been a subject of debate for quite some time. When law enforcement agencies suspect an individual of criminal activity, they can seize assets related to the suspected offense during their investigation. These powers extend to cryptocurrencies as well. While these measures are commonly used in the country, the lack of charging the victims with an offense before asset seizure raises questions about the legitimacy and fairness of such practices.
It’s no longer surprising that this method is being applied to cryptocurrencies, as regulatory bodies can now utilize it to execute questionable – albeit legal – confiscations. This tactic disregards the assumption of innocence. Consequently, U.K. authorities have an open invitation to misuse their power against crypto holders, potentially for personal or political gain.
With the recent change allowing law enforcement agencies like the police or NCA to seize suspected crime proceeds without an immediate arrest, these new powers can be employed earlier in investigations. This early implementation may boost the chances of successfully recovering such assets. However, it also raises concerns as taking action at this stage might result in insufficient justification for the seizure compared to before. Consequently, the likelihood of errors being made during these procedures increases.
Law enforcement agencies have been granted the authority to liquidate confiscated cryptocurrencies for cash. However, the crypto market is subject to significant price fluctuations. While this power allows law enforcement to sell crypto assets before they lose value, there’s a risk they might be sold too early – right before a sudden price surge. In such cases, the original crime victim could miss out on substantial gains in the value of their seized crypto assets. Therefore, exercising these new powers with great care is essential to avoid potential losses.
As a crypto investor, I’ve been following the news about the new regulatory powers granted to law enforcement agencies with great interest. These new tools are expected to bring significant changes in dealing with fraud and drug-related offenses in the cryptocurrency space.
The attention given to crimes involving cryptocurrencies should inspire the evolution of common law. The Law Commission’s Digital Assets Report, released in June 2023, acknowledged the strides made by the courts in handling such cases and advocated for the advancement of common law. Nevertheless, it’s puzzling why parliament has yet to pass new legislative powers in light of this, given that common law alone may not be sufficient to tackle all the issues at hand.
It’s worrisome that the ECCTA, despite potentially benefiting law enforcement, fails to establish mechanisms for U.K. authorities to exchange information with international agencies when crypto assets move between different jurisdictions. Consequently, there’s a risk that U.K. police may lose their ability to seize or recover such assets once they have been transferred out of their jurisdiction.
In simpler terms, the new seizure policy infringes upon personal freedoms, and it remains to be seen how aggressively authorities will employ it to bypass the established principle of a fair trial.
The following article is meant to provide basic information and doesn’t constitute legal or financial advice. The ideas shared in this piece are solely those of the author and may not align with the perspectives of CryptoMoon.
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2024-05-14 20:57