Featured Product

    FCA on Authorization for Firms Offering Cryptocurrency Derivatives

    April 06, 2018

    FCA issued a statement on the authorization requirement for firms offering cryptocurrency derivatives. FCA also published a feedback statement that summarizes the feedback received, along with its response, on its consultation on the Distributed Ledger Technology (DLT). As indicated in the FCA feedback statement on DLT, cryptocurrencies are not currently regulated by FCA, provided they are not part of other regulated products or services. Cryptocurrency derivatives are, however, capable of being financial instruments under the Markets in Financial Instruments Directive II (MIFID II), although FCA does not consider cryptocurrencies to be currencies or commodities for regulatory purposes under MiFID II. Firms conducting regulated activities in cryptocurrency derivatives must, therefore, comply with all applicable rules in the FCA Handbook and any relevant provisions in directly applicable EU regulations.

    It is likely that dealing in, arranging transactions in, advising on, or providing other services that amount to regulated activities in relation to derivatives that reference either cryptocurrencies or tokens issued through an initial coin offering (ICO), will require authorization by FCA. This includes:

    • Cryptocurrency futures, which represent a derivative contract in which each party agrees to exchange cryptocurrency at a future date and at a price agreed by both parties
    • Cryptocurrency contracts for differences (CFDs), which is a cash-settled derivative contract in which the parties to the contract seek to secure a profit or avoid a loss by agreeing to exchange the difference in price between the value of the cryptocurrency CFD contract at its outset and at its termination
    • Cryptocurrency options, which represents a contract that grants the beneficiary the right to acquire, or dispose of, cryptocurrencies

    To ensure whether a firm requires authorization, the general guidance of FCA on the regulatory perimeter in PERG may be helpful. It is the responsibility of the firms to ensure that they have the appropriate authorization and permission to carry on a regulated activity. If your firm is not authorized by FCA and is offering products or services requiring authorization, it is a criminal offence. Authorized firms offering these products without the appropriate permission may be subject to enforcement action.

     

    Related Links

    Keywords: Europe, UK, Banking, Securities, Authorization Rules, Cryptocurrency Derivatives, MiFID II, DLT, Initial Coin Offerings, FCA

    Related Articles
    News

    FSB Report Finds Steady Increase in Climate-Related Disclosures

    FSB published the annual report that examines to-date progress toward implementation of climate-related disclosure recommendations of the industry-led Task Force on Climate-related Financial Disclosures (TCFD).

    October 29, 2020 WebPage Regulatory News
    News

    APRA Consults on Reporting Standard for Credit Risk Management

    APRA is consulting on the reporting standard for credit risk management (ARS 220.0).

    October 28, 2020 WebPage Regulatory News
    News

    PRA Consults on Proposals to Support Transposition of BRRD2

    PRA launched a consultation (CP18/20) setting out proposals for the "Contractual Recognition of Bail-in" and "Stay in Resolution" Rules.

    October 28, 2020 WebPage Regulatory News
    News

    FASB Consults on XBRL US DQC Rules Taxonomy and Technical Guides

    FASB is consulting on the XBRL US Data Quality Committee (DQC) Rules Taxonomy (DQCRT) along with two technical guides.

    October 27, 2020 WebPage Regulatory News
    News

    EC Proposes to Amend Liquidity Coverage Rules for Covered Bond Issuers

    EC published draft of a delegated regulation amending liquidity coverage rules for covered bond issuers.

    October 27, 2020 WebPage Regulatory News
    News

    ESMA Confirms Endorsement of UK Credit Ratings Post Brexit Transition

    ESMA published an update to its March 2019 statement on the endorsement of credit ratings from UK.

    October 27, 2020 WebPage Regulatory News
    News

    PRA Updates Q&A on Branch Return Form

    PRA published Version 2 of the questions and answers (Q&A) on the Branch Return form.

    October 26, 2020 WebPage Regulatory News
    News

    Regulators Fine Goldman Sachs for Risk Management Failures

    FCA and PRA in the UK, FED in the US, and the authorities in Singapore have fined Goldman Sachs for risk management failures in connection with the 1Malaysia Development Berhad (1MDB).

    October 23, 2020 WebPage Regulatory News
    News

    ISDA Launches IBOR Fallbacks Supplement and Protocol

    ISDA launched the IBOR Fallbacks Supplement and the IBOR Fallbacks Protocol, with both becoming effective on January 25, 2021.

    October 23, 2020 WebPage Regulatory News
    News

    Canada Hosts International Conference of Banking Supervisors

    BCBS announced that OSFI and the Bank of Canada hosted the 21st International Conference of Banking Supervisors (ICBS) virtually on October 19-22, 2020.

    October 22, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 6022