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Most of us view it as tyrannical or indefensible when a government seizes someone’s assets without arresting them or even charging them with a crime. But thanks to a law that went into effect in April, that’s the new reality facing cryptocurrency owners in the United Kingdom.

The change, which came into effect on April 26, is the result of amendments to the Economic Crime and Corporate Transparency Act 2023 (ECCTA), which amended confiscation regimes in the Proceeds of Crime Act 2002 (POCA). U.K. police and the National Crime Agency (NCA) may now seize crypto assets from suspects without arresting them.

In simple terms, the change means that the authorities can seize crypto from those suspected of criminal activity. The authorities will also have the power to seize physical items related to crypto investigations, such as flash drives and written passwords, and to “destroy” a crypto asset if returning it to circulation is not considered to be conducive to the public good.

How will crypto be 'destroyed'? No one knows

Exactly how such assets will be destroyed has not been detailed. Regulators issued a circular on how to implement the law, but it is far from complete. It details the scenarios in which the powers of destruction can be exercised but does not provide details on the practicalities of how such destruction will take place.

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Cryptocurrencies have been used for years by criminal gangs to launder the proceeds of crime. Supporters of the new measures suggest they will help to combat some of that laundering.

However, if police begin seizing cryptocurrencies without their victims with a crime, it is hard to see their approach as anything more than an asset-grab powered by a presumption of guilt without evidence. Civil seizures that do not require charging victims with an offense has been a contentious issue in the U.K. for years. When the police suspect an individual of criminal activity, they have the power to seize assets — such as cash, vehicles and now crypto — related to the suspected criminal activity while conducting their investigation. These powers are widely and regularly used by law enforcement agencies in the country.

While it is unsurprising to see this approach expanded to crypto, authorities may now use this power as a means of carrying out unjustified — but legal — seizures. The approach does not acknowledge a presumption of innocence. The door is now open for U.K. authorities to abuse their power in targeting crypto holders, and exploited for personal or political motives.

Now that the police or NCA no longer require the evidence to carry out an arrest before such a seizure, these new powers can be utilized at an earlier stage – which will increase the likelihood of seizing suspected proceeds of crime. But taking such action at an earlier stage may also increase the possibility of such seizures being carried out with less grounds for doing so than would previously have been the case. And that surely increases the possibility of mistakes being made.

Powers have also been granted to law enforcement agencies allowing them to sell seized crypto assets for cash. But market fluctuation is a major issue in the crypto market. So while these powers enable law enforcement agencies to sell crypto assets before they devalue, there is also the risk that they may be sold prematurely — just before the value of that crypto asset skyrockets. This could then mean that the victim of the original offense — whose assets were being held in crypto by criminals prior to seizure — may lose out on potentially huge increases in value. This is another reason that law enforcement will need to use these new powers with the utmost caution.

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The most immediate use for these new powers will be for offenses relating to fraud and drugs. Current civil remedies for victims of fraud through the High Court can be costly and time consuming. There is the hope that these new powers afforded to law enforcement will go some way to changing that. They may also be effective in preventing the swift dissipation of assets generated by large-scale drug operations.

The focus on crypto-related offenses should involve development of the common law. The Law Commission Digital Assets Report, published in June 2023, highlighted the progress made by the judiciary in this regard and championed the development of the common law. But the common law alone has been unable to address all the problems, so it remains unclear exactly why it has taken so long for parliament to enact these new powers in response to this.

While law enforcement may welcome the changes, it is concerning that the ECCTA does not set out powers for U.K. law enforcement to share information with other agencies globally when crypto assets are being transferred to other jurisdictions. This creates a risk that U.K. police will be powerless to regain control of such assets if they are transferred out of their jurisdiction.

The bottom line is that the new seizure regime compromises individual civil liberties, and we’ll soon find how vigorously authorities plan to use it to undermine our traditional right to due process.

Syed Rahman is a guest columnist for Cointelegraph and a partner at Rahman Ravelli, a law firm in the United Kingdom, where he represents clients in commercial and financial disputes and major white-collar crime cases. He graduated from the University of Huddersfield with a law degree before obtaining a post-graduate diploma from York Law School. He is also a founding member of the Crypto Fraud and Asset Recovery network (CFAAR).

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.