FCA Consults on Guidance on Cryptoasset Activities It Regulates

The guidance will help firms understand whether their cryptoasset activities fall under FCA regulation. The guidance is also intended to provide firms with a better understanding of whether they need to be authorized and can help the firms to ensure that they are compliant and have appropriate consumer safeguards in place. The consultation is in response to industry request for greater clarity and to the Cryptoasset Taskforce’s recommendation that FCA provide additional guidance on the existing regulatory perimeter. This consultation is an important first step in delivering the outcomes of the Cryptoasset Taskforce as well as in the FCA work to address the harms from cryptoassets and encourage innovation in the interest of consumers.

This guidance applies 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, recognized investment exchanges, and consumers and consumer organizations. The guidance also covers security tokens and utility tokens, with the consultation paper setting out where tokens are likely to be:

• Specified investments under the Regulated Activities Order
• Financial instruments under the Markets in Financial Instruments Directive II
• E-Money under the e-money regulations
• Captured under the payment services regulations

FCA will publish its feedback and the final text of this guidance in summer 2019. Later this year, FCA is also expected to consult on banning the sale of derivatives linked to certain types of cryptoassets to retail investors. The government is planning to consult on whether to expand the regulatory perimeter to include further cryptoassets activities. 

Related Links

• News Release
• Consultation Paper
• Overview of Taskforce
• Report of Crypto-Assets Taskforce (PDF)

Comment Due Date: April 05, 2019

Keywords: Europe, UK, PMI, Banking, Securities, Crypto Assets, Regtech, Fintech, FCA