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The United Kingdom has renewed its demand for Apple to create a backdoor into encrypted iCloud backups, a move that is raising alarms over crypto wallet security and broader digital privacy. According to a Financial Times report, the government has ordered Apple to allow access specifically to iCloud accounts registered in the UK.
Although the government says the demand is narrower than previous requests, privacy advocates warn the new demand still poses serious risks for users, particularly those who store sensitive financial data and private keys through iCloud.
Many leading mobile wallets including Coinbase Wallet, Uniswap Wallet, Zerion, Crypto.com DeFi Wallet, and MetaMask allow users to back up encrypted keys to Apple’s cloud service. Security experts warn that if iCloud backups are made accessible to authorities, the potential for exploitation or brute-force attacks could compromise crypto wallet security for millions of users.
Security experts warn that even with encryption intact, government access enables the possibility of password-guessing attacks that weaken overall protections, — cybersecurity researchers cited by CoinDesk.
Digital rights organizations have voiced strong opposition. The Electronic Frontier Foundation (EFF), which has long campaigned against mass surveillance and weakened encryption, criticized the UK’s latest action.
This is still an unsettling overreach that makes U.K. users less safe and less free. Any backdoor built for the government puts everyone at greater risk of hacking, identity theft, and fraud, — Electronic Frontier Foundation, in a statement.
The request relies on powers outlined in the Investigatory Powers Act, which allows the UK Home Office to issue what is known as a Technical Capability Notice (TCN). These notices can legally compel companies to remove or bypass encryption features.
In January, the government issued a similar TCN that would have required Apple to either build a backdoor or block its Advanced Data Protection feature which enables end-to-end encryption for iCloud for UK users. While the company resisted, the result was that Advanced Data Protection has still not been rolled out in the UK.
Critics argue that targeting cloud storage weakens crypto wallet security, since private keys stored in iCloud backups are a common fail-safe for users who lose access to their devices.
The clash also revives debates about the historical link between cryptocurrency and privacy activism. Bitcoin, now valued above $120,000 per coin, was originally championed by cypherpunks which is a collective of technologists who opposed government restrictions on cryptography during the 1990s.
That ethos remains deeply ingrained in the crypto community. Ethereum co-founder Vitalik Buterin has recently criticized the EU’s proposed “Chat Control” regulation, which would require pre-encryption scanning of messages. Buterin argued that such mechanisms are inherently flawed:
“Backdoors built for law enforcement are inevitably hackable. They don’t just reduce privacy — they reduce everyone’s safety,” — Vitalik Buterin, Ethereum co-founder.
Advocates say that attempts like the UK’s to undermine encryption are especially dangerous because they directly endanger crypto wallet security, exposing investors to theft and fraud in a sector where stolen funds are rarely recoverable.
For policymakers, the UK’s renewed push raises tough questions about balancing national security with individual rights. For crypto investors and fintech firms, however, the concern is more immediate: whether crypto wallet security can remain intact if government-mandated backdoors become standard practice.
Mandating access to encrypted iCloud backups risks breaking a crucial line of defense for digital assets. If wallets and key backups are compromised, so is the integrity of the financial ecosystem built on them, — Chris Weston, Senior Analyst at Pepperstone.
The timing is particularly sensitive as global adoption of decentralized finance (DeFi) and digital wallets accelerates. By 2025, industry analysts project that over 1 billion people will use crypto wallets, with many relying on iCloud or similar services for secure key recovery. Weakening encryption could therefore create systemic risks across the sector.
The UK government insists its approach is aimed at protecting national security and enabling law enforcement to combat crime. Yet experts argue that undermining encryption produces the opposite effect making ordinary citizens, investors, and institutions more vulnerable to cyberattacks.
As the debate escalates, crypto wallet security has emerged as a central battleground in the wider fight over digital rights. The outcome could determine not only how secure crypto users remain in the UK, but also how other governments approach encryption policies in the years ahead.
