Crypto Wallet Freezing Orders and the Fight Against Crime

Cryptoassets are a digital representation of value. There are numerous types of crypto asset, such as Bitcoin (a digital currency), ‘Non-fungible tokens’ (digital assets that represent real-life objects – either physical such as art, or digital such as audio clips) and crypto related funds (for example, blockchain funds). They have become a “significant part of the world of finance, with a global value estimate at $0.8 trillion”[1], and according to the FCA’s latest research “12% of UK adults now own crypto”[2]. However, crypto assets have also become a hotbed of crime — for example, a vehicle for complex money laundering schemes, terrorist financing and drug trafficking.

As part of the UK’s efforts to tackle crime and keep pace with the rapidly changing nature of it, the Economic Crime and Corporate Transparency Act 2023 introduced several amendments to the Proceeds of Crime Act 2002 specifically in support of the recovery of crypto assets.

Since April 2024, Crypto Wallet Freezing Orders (“CWFOs”)[3] enable law enforcement agencies to rapidly freeze and seize crypto assets, requiring only that an enforcement officer has “reasonable grounds” to suspect that the crypto assets held in a crypto wallet “are recoverable property” or “are intended by any person for use in unlawful conduct”. However, the assets must be held in a wallet that is administered by a UK-connected crypto asset service provider. Crucially, such an application can be made without notice, and heard before a Magistrates Court. If the application is granted, then the assets can be frozen for a period of up to two years but can be extended for a period of up to three years beginning with the day on which the crypto wallet freezing order was made.

The requirement for an enforcement officer to merely have a reasonable suspicion is a low threshold to meet and the fact that such applications can be heard in a Magistrates Court, which are often heavily listed and under time constraints means that the level of oversight as to the true merits of any application may be limited. Enforcement officers will also need specialist training and expertise to be able to properly manage crypto assets. This requires time and investment. Ultimately, the development of CWFOs acts as a clear signal that the UK is trying to strengthen its armoury in the fight against crime and recognises crypto assets to be a key area of attack.

[1] House of Lords Library, Cryptoassets; What does the future hold? Published 9 March 2023, accessed 6 June 2025: https://lordslibrary.parliament.uk/cryptoassets-what-does-the-future-hold/

[2] FCA finds crypto ownership continues to rise as it delivers plans to regulate crypto. Published 26 November 2024, accessed 6 June 2025: https://www.fca.org.uk/news/press-releases/fca-finds-crypto-ownership-continues-rise-it-delivers-plans-regulate-crypto

[3] 303Z36, Proceeds of Crime Act 2002: https://www.legislation.gov.uk/ukpga/2002/29/part/5/chapter/3D/crossheading/freezing-of-crypto-wallets