Crypto-Asset Oversight in the United Kingdom
In July 2019, the treasury department of the Government of the United Kingdom (the “Treasury”) announced that from January 10, 2020, the United Kingdom’s Financial Conduct Authority (the “FCA”) will require all crypto-asset businesses to register with it for the purposes of anti-money laundering and counter terrorist financing (“AML/CTF”) supervision, and any crypto-asset business that fails to register with the FCA for these purposes may not carry on any crypto-asset activity. In October 2019, the FCA released a consultation paper seeking feedback from stakeholders on its proposals for funding the new oversight function. Under the proposal, the FCA will require crypto-asset businesses to register with the FCA and, as part of this registration, businesses of this type will pay a registration fee and an annual periodic fee to the FCA based on the particular business’s income. All crypto-asset businesses will be subject to a broad oversight regime administered by the FCA.
This oversight regime will likely have significant implications on how businesses dealing with crypto-assets will be able to operate in the United Kingdom. It brings into focus a broader emphasis on crypto-assets by regulators in the United Kingdom. This is partially being driven by the courts beginning to classify these types of assets as “property” in the traditional sense, as well as a general view that these new technologies lend themselves more easily to illegal activity.
We have set out below a brief summary of the background and application of the FCA’s new supervisory role and the possible impact for participants.
