Definition. A wallet whose private keys are administered by the person who owns the cryptoassets, not by a cryptoasset business. UK law defines it in regulation 64B of the Money Laundering Regulations 2017.
How it works
When a provider such as an exchange holds bitcoin for a customer, the provider controls the keys and the wallet is hosted. When the customer holds the keys itself, on its own signing devices, the wallet is unhosted. The word sounds technical, but it is the normal state for a company that withdraws its bitcoin to its own 2 of 3 multisig after buying.
Regulation 64B of the Money Laundering Regulations 2017 defines an unhosted wallet as software or hardware that enables a person to store and transfer a cryptoasset on their own behalf, and in relation to which a private cryptographic key is administered by that person. An unhosted wallet transfer is a transfer between an unhosted wallet and a cryptoasset business. Regulation 64G lets the business ask its customer for the names of the originator and beneficiary and related details, and from 30 June 2026 it can ask for more where the transfer, with linked transfers, is worth £800 or more and the customer is the beneficiary.
FinCEN's 2019 guidance on convertible virtual currency business models describes hosted wallets, where a provider controls the funds, and unhosted wallets, where the user does. It says a person using an unhosted wallet to transact on their own behalf is not a money transmitter. The Funds Travel Rule in 31 CFR 1010.410(f) applies to transmittals of $3,000 or more between financial institutions; a withdrawal to the company's own wallet has no receiving institution, but the provider still runs its own checks.
Why it matters for a company
Expect questions whenever bitcoin moves between a provider and the company's own wallet. The provider may ask whether the wallet belongs to the company and may ask for proof, such as a signed message from one of its addresses. A short ownership pack, kept ready, answers these questions quickly and consistently. Our judgement, not a rule: a collaborative arrangement where a provider holds one of three keys is still a wallet the company controls, but describe it accurately if asked.
Common mistakes
- Describing the company wallet as a director's personal wallet.
- Giving different answers to the same provider on different days.
- Assuming unhosted means unregulated for the provider. The provider's own rules still apply to its side of the transfer.
Related
- Travel Rule
- Multisig
- Custodian
- Collaborative multisig
- Withdrawing to the company wallet
- All glossary terms
Sources
Primary sources only. Each link was checked on 9 November 2026. Rules change, so confirm the current version with your adviser.
- legislation.gov.ukMoney Laundering Regulations 2017, regulation 64B: interpretation, including unhosted wallet and unhosted wallet transfer
- legislation.gov.ukMoney Laundering Regulations 2017, regulation 64G: requesting information for unhosted wallet transfers (£800 from 30 June 2026)
- eCFR31 CFR 1010.410(f): the Funds Travel Rule for transmittals of $3,000 or more
- FinCENFIN-2019-G001: business models involving convertible virtual currencies (PDF)
This is general information and education only. It is not financial, investment, tax, accounting, legal or regulatory advice, and it is not a recommendation to buy, sell or hold bitcoin or any other asset. It does not take account of your circumstances or those of your company. You must obtain your own official professional advice to confirm this information is correct before acting on it.
Rules change. This information is correct to our understanding at the last-reviewed date, but it may be incomplete or out of date, and official sources take precedence. Bitcoin is volatile. A company that buys it could lose some or all of the money it puts in.
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