The FCA is investigating 24 businesses that deal with cryptocurrencies in the UK and has opened 7 whistleblower reports during 2018, considering whether the businesses in question might be carrying on regulated activities that require FCA authorisation without the appropriate licences. The data was published in response to a freedom of information request from accountancy and consultancy firm Moore Stephens and reported in the FT last week. The FCA confirmed that they are focusing on “identifying and determining the most serious matters which pose the greatest risk to consumers” and if regulatory breaches are found they may take enforcement action. This comes on the back of a recent statement from the FCA to confirm that, whilst cryptocurrencies themselves are not currently regulated, cryptocurrency derivatives do fall within the regulatory perimeter. The FCA noted in April that “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 authorisation by the FCA.” Penalties for breach include fines and potential imprisonment. We are currently advising clients in this space on the regulatory perimeter, consequences of unintended breach and options for remedial action which are going to become increasingly live issues as the ongoing investigations progress.
Link to FT article: https://www.ft.com/content/b9d2b246-6003-11e8-ad91-e01af256df68