The United Kingdom plans to remove Know Your Customer (KYC) requirements for non-custodial Bitcoin wallets. It is a major win for privacy and Bitcoin supporters on the European continent.
The UK Treasury released its June report wherein it claimed that there is a lack of evidence that non-custodial Bitcoin (BTC) wallets are used for criminal purposes.
Non-custodial wallets are those wherein the user is its own bank, i.e., there is no third party involved between users and their assets. On the other hand, examples of custodial wallets include Lightning Wallets such as Wallet Of Satoshi and others.
Interestingly, the report acknowledged that “many persons who hold Bitcoin for legitimate purposes use unhosted wallets,” and there is no “good evidence” that said wallets are used for illegitimate reasons.
Terms such as “unhosted wallets” and “non-custodial wallets” are seen as an attack on Bitcoin by many advocates of monetary sovereignty as they imply something negative. In the eyes of most Bitcoiners, controlling one’s private keys is the single purpose of bitcoin.
Bitcoin was designed to allow anyone to create wallets without asking for permission. Since the code is open source, many wallet developers advertise that they do not collect any user data.
To request bitcoin wallet providers to filter transactions and collect user information simply shows how deeply corrupt and ignorant public bodies are these days.
As a result, the UK Treasury will only rely on the data collected by registered bitcoin services providers regarding Bitcoin transactions which pose a risk of illicit finance.
Treasury released its report after a consultation with regulators, industry leaders, academia, civil society, and government bodies. As usual, nobody was invited who could have explained the truth. Regulating bitcoin is pointless as its code is out in the wild. Any attempt to limit bitcoin’s borderless and permissionless design through regulation is set to fail and will only reflect negatively on the country.
On the contrary, the UK’s Financial Conduct Authority (FCA) said that BTC ATMs in the nation must be registered with the authority to comply with money laundering regulations, shutting down multiple ATMs recently.