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The British Treasury has decided that crypto companies do not need to collect information about users‘ wallets. As a result, users will not have to prove that a particular receiver address belongs to them. The reason for this decision is that the government is concerned about privacy.
No good evidence for disproportionate criminal activity
In a report this month, the UK Treasury writes that “many individuals who hold crypto-assets for legitimate purposes use non-hosted wallets” and that there is no “good evidence” that such wallets are disproportionately used for criminal activity. The government does expect crypto companies to collect personal information for “transactions identified as presenting an increased risk of illicit finance.“
The Treasury had previously indicated that crypto transactions would fall under the supervision of the Financial Action Task Force (FATF), which means that both the originator and the recipient of the funds transferred by crypto companies must be identified.
The measure was withdrawn due to concerns about privacy, feasibility and the short- and longterm costs. Some of those consulted suggested using Zero-Knowledge Proof technology to “demonstrate that due-diligence checks have been carried out”, to avoid sharing personal information.