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U.K. Clamps Down on Crypto Criminals. Will It Work?

Plans to burn ill-gotten crypto that can't be returned to victims — instead of dumping it on the market — is attracting praise from some corners of the industry.

Fresh from announcing crypto-friendly policies designed to encourage exchanges to set up shop in Britain, the U.K. government is now turning its attention to criminals who use digital assets to evade the law.

New powers have come into force that aim to claw back digital assets illegally obtained by "drug dealers, fraudsters and terrorists," the Home Office says.

Key headlines from this new policy push include:

  • Police being able to seize crypto before making an arrest
  • Officers allowed to transfer coins and tokens to wallets controlled by law enforcement
  • Burning cryptocurrencies if returning them to circulation "is not conducive to the public good"
  • Enabling victims to apply for stolen funds back

On paper, all seem like sensible, crypto-literate measures that could make life harder for thieves and scammers. But as the old saying goes: "Build a 20-foot wall, and they'll build a 21-foot ladder."

The announcement makes no mention of the coin mixers and tumblers often used to launder stolen funds — and if anything, may inspire criminals to seek ingenious new ways of hiding crypto from detectives. While centralized exchanges have previously shown they are willing to cooperate with the authorities (for example, Coinbase shares data on customers with the taxman) life may get more difficult in the unregulated world of decentralized finance.

Over on X, there's been the usual, tired claims that the government is trying to eradicate crypto — but one particular measure has drawn praise. Back in January, the colorful (and controversial) founder of HEX, Richard Heart, had argued that Bitcoin's price is "murdered" whenever coins are seized by law enforcement and sold on the open market — adding selling pressure and harming everyday investors. At the time, he had suggested:

"Why should your Bitcoin investment be harmed because of the actions of a criminal? What did you do to deserve that? ... Maybe the coins should be burnt instead of dumped, like they would say, drugs seized."

Reacting to this announcement, he posted on X:

In the fast-paced world of crypto crime, time can also be of the essence in seizing stolen funds before they are moved out of the reach of law enforcement. By cutting red tape for officers, and allowing them to act swiftly once credible tips are received, victims of romance scams and ransomware attacks could have a greater chance of getting some of their money back.