The UK is considering measures that could force Apple to provide access to some iCloud data, raising questions about exactly what cryptocurrency users keep their wallets on their iPhones and Macs.
If device backups and common file stores lose end-to-end protection in the UK, seed phrases and private key material could easily move from a user’s device to a place where lawful processes or technical capability notices can reach them.
UK authorities have issued a new technical competency notice to Apple, focusing on iCloud access for UK accounts. Apple has not commented on the order.
The Home Office does not comment on individual notifications, which are deliberately kept secret. Apple withdrew Advanced Data Protection for UK users in February. This setting extended end-to-end encryption to categories such as device backups, iCloud Drive, Photos, and Notes.
iCloud Keychain remains end-to-end encrypted by default, and Apple says it has never built backdoors into its products.
This division is important because crypto wallets don’t just exist within iCloud Keychain.
Users often take screenshots of seed phrases and save them in photos, write down recovery words in notes, or leave wallet app data in their device backups. If Advanced Data Protection is not available, these categories revert to keys held by Apple and can be decrypted after authentication or upon lawful command.
The UK changes do not affect iCloud Keychain. However, content outside of the keychain does. Past cases, including incidents related to the MetaMask advisory, have shown real losses when wallet vaults written to iCloud backups are phished and compromised.
Apple details how backup protection works in iCloud Backup Security Overview and explains keychain protection in Keychain Security Overview. The broader (Advanced Data Protection) page outlines categories that receive end-to-end encryption when the feature is available.
The timing of the policy creates a short-term window for wallet risk to shift without changing the Bitcoin or Ethereum protocols. The Code of Practice in the Online Safety Act enables Ofcom to propose and certify technical measures, including client-side scanning methods, and to oversee how services comply.
The 2025 consultation addressed additional safety measures and potential technology notifications. Although the details of the UK’s new obligations will remain confidential until they are implemented, the regulatory direction is clear and users and developers can update their threat models now.
A simple way to estimate exposure is to estimate the population of UK iPhone users whose content relies on keys held by Apple. Using the Office for National Statistics’ mid-2024 population estimate of approximately 69.3 million people, a smartphone penetration of 90-95 per cent derived from the DataReportal and Ofcom context, an iOS share band of 45-55 per cent, and the assumption that 60-75 per cent of iPhone users have iCloud storage or backup enabled, the addressable pool is in the tens of millions.
The ranges below are illustrative and should be presented as ranges rather than point-in-time predictions.
Not all of these users are at risk of losing their wallets. However, this pool illustrates the magnitude of the risk when Apple-owned keys and UK-only access passes coexist.
Stress testing helps solidify the discussion.
If 1 to 3 basis points of that pool were compromised over a year, through a combination of legitimate access abuse, social engineering after data disclosure, or targeted account recovery attacks that are successful because more content is decryptable, that number would be approximately 1,700 to 8,000 users.
If the median hot wallet balance conservatively ranges from $2,000 to $10,000, direct losses could total between $3 million and $80 million. This calculation does not claim inevitability, but it does highlight how the magnitude and incentives change when backups and common file stores are not end-to-end encrypted.
The route through which keys are compromised is just as important as a policy issue.
iCloud Keychain remains end-to-end encrypted, so passwords and passkeys stored there are not a soft spot. The weakness appears when users choose convenience over segmentation. Photos and notes can be decrypted by Apple without advanced data protection.
App data left in iCloud backups can be decrypted by Apple. Optional cloud backup features built into some wallets, such as the Coinbase Wallet documentation that describes opt-in recovery phrase backups, are dependent on the strength of the user’s passphrase and the provider’s implementation, and inherit changes in the surrounding cloud threat surface.
According to Apple documentation, secrets must reside in a Secure Enclave with appropriate access controls, and developers can mark files to exclude them from iCloud backups.
Three scenarios help clarify how the next 12 to 18 months will unfold.
First, the UK-only carve-out continues, with Apple maintaining Apple-held keys for backups and common stores, and adjusting internal processes in line with new notifications. Where seeds intersect with stores, wallet risk remains high for retail users.
Second, through legal or political reversals, advanced data protection will return to the UK and risks will return to the global baseline of phishing, device theft and product information theft.
Third, Ofcom-certified client-side scanning is extended on the device prior to encryption as a means of circumventing formal key escrow. The debate mirrors the European Union’s ongoing debate over chat scanning.
Targeting new scan code paths and review APIs also increases the attack surface and normalizes inspection of device content that was previously opaque to the service.
Developers have narrow controls to reduce risk regardless of policy.
Practical steps include avoiding seed material in cloud sync stores, marking secrets and vaults with a non-backup attribute, relying on Secure Enclaves for key protection, and requiring expensive key derivation settings for optional cloud backup features to reject weak passphrases.
Users have parallel paths: moving seed storage completely off the device and the cloud, avoiding screenshots and recovery word notes, and strengthening Apple ID recovery and two-factor authentication because more decryptable cloud data increases the value of account takeover.
According to Coinbase Wallet guidance, cloud backups are opt-in and encrypted with a password of your choice, so if you choose this feature you are responsible for the quality of your password.
The broader market context helps explain why UK policy changes resonate outside the UK.
Apple and Google control nearly everyone’s mobile stack, so any jurisdictional carve-outs that apply to major platforms create both a code path and a precedent.
Australia’s Aid and Access Act and India’s Section 69 authorities demonstrate how targeted orders can expand in scope over time. The European Union’s discussion of client-side scanning, often referred to as chat control, illustrates the struggle to achieve safety goals with end-to-end encryption.
Even if the UK notice is binding only on UK accounts, engineering to circumvent encryption in one place increases pressure to reproduce the results elsewhere, prompting adversaries to consider new methods.
Apple’s public position is not to build backdoors, and its documentation lists the categories of data that remain encrypted end-to-end.
iMessage and FaceTime will continue to use end-to-end encryption, and iCloud Keychain will continue to protect your secrets at rest, Apple said in a statement.
The question for cryptocurrency users is not whether Apple will disable end-to-end encryption everywhere, but whether commonly used storage categories outside of the keychain and the legitimate processes that govern them create a practical path to wallet compromise if seeds or key material touches those locations.
The short-term facts are straightforward.
The UK has updated its secret order seeking access to UK users’ iCloud data. Apple discontinued Advanced Data Protection for new users in the UK in February.
The UK support notice and Advanced Data Protection documentation details which categories maintain end-to-end encryption.
Ofcom is still adjusting how online safety laws will be enforced and how proactive technology measures will be recognized and applied.
These facts are sufficient to build a clear threat model and quantify the scope of exposure.
What happens next will depend on whether the UK mandates a way to circumvent encryption or restore end-to-end coverage to backups, photos, notes, and other high-leverage stores.
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