The Financial Conduct Authority has launched a consultation to help them refine guidance on what current cryptoassets should be subject to their regulation.
The consultation is in part a response to last year’s report by the UK Cryptoassets Taskforce that committed to providing greater clarity for firms operating in the sector. Once the Guidance is finalised the agency hopes that it
“will help market participants to understand whether the cryptoassets they use are within the regulatory perimeter. This will alert market participants to pertinent issues and should help them better understand whether they need to be authorised and what rules or regulations apply to their business.”
The proposed Guidance is set out in chapter 3 of the consultation paper and focuses on where cryptoassets interact with this regulatory ‘perimeter’ examining where they would be considered to be
- ‘Specified Investments’ under the Regulated Activities Order (RAO),
- ‘Financial Instruments’ such as ‘Transferable Securities’ under the Markets in Financial Instruments Directive II (MiFID II),
- captured under the Payment Services Regulations (PSRs)
- Captured under the E-Money Regulations (EMRs).
With the help of case-studies, the proposed Guidance goes on to define, among other things, the concepts of security, utility and exchange tokens, who needs to be regulated and when a prospectus will be required. The ten questions that the FCA would like answered are set out in Annex 1.
The FCA states that the Guidance will apply to
- firms issuing or creating cryptoassets
- firms marketing cryptoasset products and services
- firms buying or selling cryptoassets
- firms holding or storing cryptoassets
- financial advisers
- professional advisers
- investment managers
- recognised investment exchanges
- consumers and consumer organisations
The consultation is open until Friday 5 April 2019 and responses can be emailed to fcacrypto@fca.org.uk. It is hoped that the final Guidance will be published no later than summer 2019.
You can read the full consultation paper and accompanying documents on the FCA website.
