The UK government said it will not further proceed with its legislative initiative that — if it were accepted — would require crypto businesses to identify details of recipients in case crypto was sent to an unhosted wallet.
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In a consultation response paper, the Treasury said that respondents doubted that unhosted wallets could pose a high risk of illicit finance, with the percentage of transfers connected to crime broadly in line with that seen across the market.
Based on the result of public consultation launched in July 2021, the Treasury said that crypto businesses will only be expected to collect detailed information for "transactions identified as posing an elevated risk of illicit finance."
"The minimum factors that firms should consider when making such a determination of risk will beset out in the legislation."
In March this year, the Bank of England initiated its work on the country's first regulatory framework for cryptocurrencies. The BoE's Financial Policy Committee (FPC) said that regulation should be based on "equivalence," adding that crypto firms that provide financial services are subject to the same the same laws that applicable to the banking industry.
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