UK FCA Decides Which Digital Assets To Regulate

UK FCA Decides Which Digital Assets To Regulate

The regulatory body tasked with looking over the UK’s financial market, the FCA (Financial Conduct Authority) has clarified its stance on cryptocurrencies and has stated what tokens it’s responsible for.

Today’s policy statement is a response to a consultation paper posted by the FCA in January which pushed more than 90 responses from several financial services bodies, including trade associations, crypto exchanges and banks. Most responses supported its original proposals, the regulator has stated.

The report reads:

“Following our consultation, we are proceeding with the guidance that was consulted on, with some drafting changes to improve clarity based on responses. This includes reframing our taxonomy of cryptoassets to help market participants better understand whether tokens are regulated, and where they fall outside our remit.”

The latest policy by the FCA provides multiple key clarifications and definitions.

As an example, cryptocurrencies like Bitcoin and Ethereum which the FCA considers being “exchange tokens,” that are not regulated but will adhere to anti-money laundering regulations.

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Furthermore, security tokens fall under the FCA’s ‘specifcied investment’ category according to the statement, although it will also be under the firm's remit.

On the other hand, utility tokens will fall outside the FCA’s control, except for when they can be defined as electronic money and fall with a new category of e-money tokens.

Some stablecoins can also be defined as e-money and as such might also be subject to the FCA’s control.

The FCA’s executive director of strategy and competition, Christopher Woolard said in a statement:

“This is a small, complex, and evolving market covering a broad range of activities. Today’s guidance will help clarify which cryptoasset activities fall inside our regulatory perimeter,”

Earlier in July, the watchdog brought up a ban on some cryptocurrency-related investment products in a bid to protect retail investors.

A statement at the time said that cryptocurrency-based derivatives and exchange-traded notes were “ill-suited to retail consumers who cannot reliably assess the value and risks.”

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