UK tightens crypto rules, freezes £6 million under new enforcement

British authorities have frozen £6 million ($7.76 million) worth of cryptocurrency linked to suspected criminal activity since 2024, leveraging new enforcement powers granted last year.

The increase in frozen digital assets comes amid a broader effort by law enforcement, including the HMRC, the National Crime Agency, and the Financial Conduct Authority (FCA), to clamp down on the use of crypto in financial crimes such as tax evasion and money laundering.

The new regime allows courts to freeze wallets for up to three years, marking a shift in the UK’s approach to tackling the risks of digital currencies.

£1.5 million wallet freeze

The most significant individual crypto freezing order issued so far under the new powers was worth £1.5 million ($1.94 million).

It involved a single wallet hosted on Coinbase, according to court filings.

The order was granted on March 18 at the Newcastle Upon Tyne Magistrates’ Court, following an application by the HMRC.

These powers stem from legislation introduced in April 2024, which provided the legal foundation for British authorities to act pre-emptively by freezing suspicious digital assets before criminal investigations are concluded.

The aim is to prevent suspects from transferring or concealing illicit gains during an ongoing probe.

Under the new framework, wallets suspected of harbouring proceeds of crime can be locked for a maximum of three years, offering time for investigations to develop.

Crypto rules tightened

The enforcement actions come as part of a wider government-led initiative to strengthen control over the digital asset sector.

A coordinated crackdown began in April 2024, led by police forces, the HMRC, and the Home Office.

Since then, efforts have intensified across multiple agencies to address what officials describe as an "emerging threat" of crypto-facilitated crimes.

In December 2024, the Financial Conduct Authority proposed a tighter set of rules for crypto businesses to mitigate operational and consumer risks.

The FCA’s proposed regulations aim to increase transparency, strengthen due diligence, and tighten registration requirements for exchanges and service providers.

More recently, the UK government introduced the Crime and Policing Bill, which would further bolster the ability of law enforcement to confiscate digital assets suspected to be linked to illicit activity.

This proposed legislation follows a year of expanding crypto oversight, with a focus on dismantling organised financial crime networks operating through digital channels.

HMRC shifts focus

HMRC and the police have increasingly prioritised crypto-related cases in their financial crime units.

The shift represents a broader adaptation to the technological tools used by criminal networks to obscure transactions and avoid detection.

Legal practitioners familiar with these changes say the authorities are now “very keen” to use the powers at their disposal, particularly for cases involving tax evasion or complex money laundering structures.

The National Crime Agency has reportedly ramped up its operations targeting crypto crimes.

Legal experts expect a significant increase in freezing orders as investigations mature.

With the ability to seize digital assets even before prosecution, authorities can disrupt financial flows tied to criminal networks early in the legal process.

More seizures ahead

Although the frozen amount of £6 million so far may appear modest in comparison to the size of the global crypto market, the current figures are viewed as an initial phase.

Legal specialists note that the enforcement regime effectively started “from scratch” last April, and results will take time to scale.

Still, the framework is in place for a broader wave of seizures, particularly as agencies develop dedicated capabilities and cross-border cooperation improves.

The increased use of freezing orders, alongside pending legislation and regulatory tightening, underscores the UK’s strategic shift in treating crypto as a core part of financial crime enforcement.

As digital assets continue to evolve, British authorities appear committed to ensuring they do not remain beyond the reach of the law.