United Kingdom Will Not Require KYC for Unhosted Wallets
The U.K. Treasury has decided to rescind its requirement for crypto companies to compile the personal information of self-custodied wallet users, citing privacy concerns. Unhosted Wallets for “Legitimate Purposes” The United Kingdom‘s government won’t be requiring crypto businesses to collect personal data for all transfers to non-custodial wallets. In its June report, the Treasury acknowledged that “many persons who hold cryptoassets for legitimate purposes use unhosted wallets” and that no “good evidence” shows such wallets being used disproportionately for criminal activity. It will therefore only expect crypto businesses to collect personal information for “transactions identified as posing an elevated risk of illicit finance.” The decision was made based on the feedback the Treasury received from its consultation with regulators, industry leaders, academia, civil society, and government bodies on the subject of updating money-laundering regulations. The Treasury had previously indicated crypto transfers would fall under Financial Action Task Force (FATF) standards, meaning that both originator and recipient of transferred funds would need to be identified by crypto firms. The measure was dropped due to concerns over privacy, feasibility, and short- and long-term costs. Some of those consulted suggested using Zero-Knowledge Proof technology to “demonstrate customer due diligence checks had been performed” while avoiding the sharing of personal