The UK government says cryptocurrencies could be seized to stop crime

Cryptocurrencies could be seized to help fight economic crime, the British government said Thursday, but its proposal has stalled below the sweeping overhaul demanded by lawmakers who want a single agency to fight crime.

The pandemic has increased online scams

Banking and online scams have increased in Britain, particularly after the COVID-19 pandemic.

The government said in its response to a parliamentary investigation into economic crime that it will push through legislation to allow cryptoassets to be seized and recovered more quickly, as soon as parliamentary time permits.

"In particular, (we propose) the creation of a civil confiscation power that would mitigate the risk posed by those who cannot be prosecuted but use their funds to promote crime," the government told Parliament's Treasury Select Committee.

The investigation had recommended a single body to address economic crime to replace a "bewildering" number of agencies, but the government said its multi-agency approach was the right one.

"It allows us to differentiate between different types of crime," the government said, adding that public sector fraud needs a different response than scams committed by individuals or businesses.

"This can be a significant missed opportunity," TSC President Mel Stride said in a statement.

Google and Meta against scams on their platforms

The government has already backed a recommendation to require online platforms like Google and Facebook to proactively address fraudulent advertising for financial products, but it will take time to pass and implement the legislation.

"Online platforms now need to step forward and urgently take down these fraudulent advertisements," Stride said.

Google has already agreed to take financial promotions only from companies regulated by the Financial Conduct Authority, with Meta, owner of Facebook (Facebook shares - ticker FB), which is expected to follow suit this year.

The investigation recommended forcing online platforms to help compensate for customers affected by scams, a step the government is not ruling out.

"We are working closely with technology companies and partners in law enforcement and civil society to consider every possible option to support victims of online fraud and to mitigate the damage they have suffered," the government said.