While much attention has been given to reforms introduced by the Economic Crime and Corporate Transparency Act 2023 (ECCTA), such as tighter Companies House regulations, the imminent corporate offence for failing to prevent fraud, and an expanded senior manager regime, there’s another crucial area undergoing transformation; the rules around proceeds of crime, especially when it comes to crypto assets.
In this article, we explore how ECCTA is reshaping the legal landscape with respect to the confiscation, seizure, detention and recovery of digital assets. From enhanced powers to seize and freeze crypto to new civil forfeiture tools, these changes mark a significant step in the UK’s fight against economic crime in the digital age. Whether you’re a crypto investor, compliance professional, or legal advisor, understanding these developments is essential.
Crypto and the Proceeds of Crime Act 2022 (POCA)
When it comes to crypto assets, law enforcement agencies were previously hamstrung by the powers previously available to them. Indeed, crypto assets seemed to be excluded from the very definition of money, given a requirement for them to be held by a relevant or conventional financial institution.
Critics also pointed to POCA’s failure to appreciate swings in value of crypto assets, the difficulties in identifying their true owner, and the speed they can be transferred and realised. Add to that the lack of regulation, and it’s clear why reform was urgently needed. The legal tools at the disposal of law enforcement agencies simply didn’t fit the fast moving, anonymous world of digital currencies.
Crypto-Specific Confiscation Regime
ECCTA has now improved the POCA confiscation regime in several ways. The ECCTA reforms reflect a wider evolution in how the UK legal system approaches asset recovery in a digital age. These powers now extend beyond procedural fixes, with officers being able to attend premises and search, seize and extract digital wallets. These capabilities are particularly critical in the context of wallets stored offline, which previously sat in a grey zone of enforceability. Further, it is now possible to seize related devices containing keys, and Magistrates have powers to authorise the sale or destruction of crypto assets.
Additionally, it introduces the concept of a wallet freezing order, enabling courts to swiftly restrict access to specific crypto assets where there is a risk of dissipation. This type of enforcement mirrors that of traditional bank account freezing powers under the POCA but has been carefully adapted for digital assets. Amendments also enable forfeiture of crypto assets following seizure and enable detained or frozen crypto assets to be converted into cash before forfeiture proceedings in the Magistrates’ Court. The latter being a direct innovation to mitigate against fluctuations in crypto assets value.
A Scalable Approach
The ECCTA reforms have not been made to patch gaps; the system has been built with scalability in mind and is designed to work in both criminal and civil spheres. It signals a long-term strategy of crypto-awareness into every layer of the UK’s financial crime response. A trend that can also be seen in the Crime and Policing Bill 2024-25 (CPB), which propose to introduce safeguards to give law enforcement greater confidence to act without fear of financial blowback. In particular, it proposes limiting adverse cost orders in civil recovery proceedings brought by agencies acting in the public interest.
UK authorities have already used their new powers to freeze significant crypto assets linked to suspected criminal activity. On 18 March 2025, HMRC secured a freezing order from the Newcastle Upon Tyne Magistrates’ Court for approximately £1.5 million worth of cryptocurrency held in a Coinbase-hosted wallet. This action represents the largest single crypto wallet freeze to date. The order was obtained without prior notice to the wallet holder, a strategy enabled by the updated legal framework to prevent the dissipation of assets.
Risk
This all sounds like a bold and positive step forward, but a question emerges. Is there the potential for these new civil recovery provisions to be overused and would that mean criminal investigations and prosecutions fall by the wayside? Is there a temptation to take a less onerous and quicker route to reclaim assets, which sidelines the criminal justice system, dilutes standards of investigation and weakens the deterrent effect?
What’s clear is that we’re entering a new phase in the regulation and enforcement of digital assets. ECCTA has equipped authorities with sharper, more targeted tools to respond to crypto-related crime, while the proposed cost protections under the CPB may encourage more confident use of civil recovery.
