Featured Product

    Christopher Woolard of FCA on Regulation of Crypto-Assets

    July 02, 2019

    While speaking at the Cambridge Center for Alternative Finance annual conference, Christopher Woolard of FCA examined the ongoing work in regulation of crypto-assets and the potential challenges in regulating financial innovation in this area. He highlighted that early engagement is incredibly valuable for monitoring, supervisory, and policy purposes. Working with innovative firms helps to achieve a better bird’s-eye view, thus enhancing understanding when the overall landscape is blurry and ­changing quickly. He also discussed how FCA looks to critically analyze different cryptoassets and why labels such as "stablecoin" are not very helpful.

    Mr Woolard explained that market participants use "stablecoin" as a broad term that encompasses a variety of different types of cryptoassets. An October 2018 joint report by BoE, FCA, and HM Treasury categorized crypto-assets into exchange tokens, security tokens, and utility tokens. A stablecoin could also refer to a crypto-asset backed by fiat currency. In certain cases, a fiat-collateralized crypto-asset could constitute e-money if it meets the definition provided in the Electronic Money Regulations. He said that this makes us question how useful the term stabledcoin is when it comes to labeling all these different tokens. He added that a stablecoin could fall within or between one of the several regulatory categories. If a cryptoasset is e-money, then the issuer needs to be authorized as an e-money issuer and needs to comply with all relevant requirements under the E-Money and Payment Services Regulations. The term stablecoin could equally apply to algorithmically controlled tokens or those backed by real world assets such as securities or, indeed, other cryptoassets.

    He added that FCA seeks to consider any crypto-asset, including those labeled stablecoin, on a case-by-case basis and encourages both consumers and firms to do likewise. Stablecoins would need to be evaluated on their characteristics, but could amount to regulated products, including, for example, collective investment schemes. This analysis is particularly important when identifying whether a specific crypto-asset sits within the regulatory perimeter or outside of it. Depending on its structure it could be many things—for instance, a derivative, a unit in a collective investment scheme, another kind of security or e-money. He also discussed how innovators should navigate the landscape and what approach regulators should take. "Innovation won’t pause whilst regulators in different jurisdictions each scramble to get the best snapshot—that is why it is critical that regulators work in concert internationally on fast-moving, cross-border issues."

    According to Mr. Woolard, big surprises in financial markets do not generally end in positive outcomes for consumers, regulators, or firms. Therefore, FCA invites firms to consider applying to its innovation firm support services, such as direct support, which provides regulatory feedback for eligible innovative propositions or the Regulatory Sandbox, which provides firms with the opportunity to setup compliant and controlled tests. FCA has worked with many innovative firms on crypto-assets to-date—over a third of propositions accepted to test in the Sandbox so far have involved an application of distributed ledger technology. Not only does this help bolster competition by helping innovative firms overcome regulatory barriers, to the benefit of markets and consumers, but also to learn more about fast-moving, developing technologies potentially disrupting financial services over time, added Mr. Woolard.

     

    Related Link: Speech

     

    Keywords: Europe, UK, Banking, Securities, Crypto-Assets, Distributed Ledger Technology, Stablecoin, Fintech, Regtech, Regulatory Sandbox, FCA

    Related Articles
    News

    EBA Single Rulebook Q&A: Second Update for November 2019

    EBA updated the Single Rulebook question and answer (Q&A) tool with answers to eight questions that relate to the Bank Resolution and Recovery Directive (BRRD) and the Capital Requirements Regulation and Directive (CRR and CRD).

    November 15, 2019 WebPage Regulatory News
    News

    FASB Delays Effective Dates for CECL, Leases, and Hedging Standards

    FASB issued two Accounting Standards Updates finalizing the delays in effective dates for standards on current expected credit losses (CECL), leases, hedging, and long-duration insurance contracts.

    November 15, 2019 WebPage Regulatory News
    News

    ESMA Updates Q&A on Securitization Regulation in November 2019

    ESMA updated questions and answers (Q&A) on the Securitization Regulation (Regulation 2017/2402).

    November 15, 2019 WebPage Regulatory News
    News

    HKMA Announces Finalization of Banking Liquidity Amendment Rules 2019

    HKMA issued a letter informing all authorized institutions that negative vetting of the Banking (Liquidity) (Amendment) Rules 2019 (BLAR) has now expired. Thus, the BLAR will now come into operation from January 01, 2020.

    November 15, 2019 WebPage Regulatory News
    News

    BCBS Consults on Revised Disclosures for Market Risk Framework

    BCBS launched a consultation on the revised disclosure requirements for the market risk framework for banks.

    November 14, 2019 WebPage Regulatory News
    News

    BCBS Consults on Disclosure Templates of Sovereign Exposures of Banks

    BCBS published a consultation on the voluntary disclosure templates related to sovereign exposures of banks.

    November 14, 2019 WebPage Regulatory News
    News

    PRA Publishes Final Policy on Maintenance of TMTP Under Solvency II

    PRA published the policy statement (PS25/19) that contains the final supervisory statement (SS6/16) on maintenance of the transitional measure on technical provisions (TMTPs) under Solvency II.

    November 14, 2019 WebPage Regulatory News
    News

    FSB Examines Implementation of Resolution Regimes in Financial Sector

    FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions and sets out plans for further work.

    November 14, 2019 WebPage Regulatory News
    News

    IAIS Adopts ComFrame, ICS, and Holistic Framework for Systemic Risk

    IAIS adopted a comprehensive set of reforms—Common Framework (ComFrame), Insurance Capital Standard (ICS) Version 2.0, and Holistic Framework for Systemic Risk—that will enable effective cross-border supervision of insurance groups and contribute to global financial stability.

    November 14, 2019 WebPage Regulatory News
    News

    PRA Publishes Templates for Statistical Disclosures Under Solvency II

    PRA published templates for statistical disclosures, as required under Article 31(2) of the Solvency II Directive.

    November 14, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4157