The recent changes to legislation in the UK have expanded the powers of law enforcement in relation to cryptocurrency. Specifically, the changes allow police to seize cryptocurrency without the need for an arrest. This includes the ability to confiscate items that aid in investigations and to transfer illicit cryptocurrency into a controlled digital wallet that is inaccessible to criminals. In addition to these changes, law enforcement officials are now able to seize items that could provide information to assist an investigation, such as written passwords or memory sticks.
According to Home Secretary James Cleverly, these reforms are also expected to enhance national security by making it easier for government agencies to strip terrorist organizations like Daesh of their crypto assets. The National Crime Agency (NCA) has highlighted that organized criminals, including drug dealers, fraudsters, and terrorists, are increasingly using cryptocurrency to launder illicit proceeds and raise funds. The NCA estimates that illicit cryptocurrency transactions linked to the UK amounted to at least £1.2 billion (~$1.5 billion) in 2021. With the updated powers, the NCA aims to prevent criminals from undermining the legitimate use of cryptocurrency while also supporting its potential role as a driver of economic growth.