- However, the UK government has reserved the right to monitor wallet transactions that are deemed as high risk.
- According to the UK report, most people who use crypto assets for legitimate reasons, use the unhosted wallets for customization purposes.
The UK government has resolved not to collect user data from unhosted crypto wallets. According to issued guidelines, unhosted crypto wallets will not report to the UK’s treasury department. Consequently, private wallets can transact without the need for KYC capabilities.
However, the UK government has reserved the right to monitor wallet transactions that are deemed as high risk. The report noted;
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 UK and the crypto wallets regulations
The UK government was keen not to kill innovation and at the same time protect its people from bad actors. Moreover, most crypto assets run on permissionless blockchains that operate at lightning speed.
According to the UK report, most people who use crypto assets for legitimate reasons, use the unhosted wallets for customization purposes. The report noted;
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),
Following the announcement, users have full control of their crypto assets for as long as they use unhosted wallets. For if the same user opts to use wallets on crypto exchanges, the KYC will definitely be implemented. Binance has been under huge scrutiny for the same reasons in the past.
The crypto market is evolving fast and multi-chain is the focus of most crypto-related projects. Furthermore, it is a safer way for securing more customers in the future. As such, the government is keen not to hinder developments and innovations in the crypto and blockchain industry.
Regulators around the world have been researching ways to enable crypto innovations in the past few years in a safe environment. The European Union, Russia, UK, United States, and Canada among other global economies are looking for ways to safely regulate the crypto and blockchain industry.
As such, crypto-related firms continue to feel the heat of regulators amid the market turmoil.
The crypto market has significantly lost value in the past few months. Painting the picture further, the total crypto market cap has dropped from around $3 trillion to around $955 billion today.
The drop is also observed in the traditional stock market, however not volatile as the crypto industry. The move by the UK to allow unhosted wallets to run without KYC has been welcomed by the crypto community. Coinbase CEO Brian Armstrong had called it anti-innovation, and privacy.
Countries are now competing to see who attracts the most investors in the crypto and blockchain industry. Remember, Bitcoin is widely regulated in the world besides being the legal tender in El Salvador and the Central African Republic.