On January 23, the UK Financial Conduct Authority (FCA) published a consultation paper proposing new guidance further clarifying the circumstances under which cryptoassets are to be regulated.

The guidance is in response to one of the commitments made by the joint Bank of England (BoE), FCA and HM Treasury (HMT) Cryptoassets Taskforce in October 2018 to provide more clarity to firms about the regulation of current cryptoassets (as detailed in the November 2, 2018 edition of the Corporate & Financial Weekly Digest).

The consultation focuses on circumstances where cryptoassets interact with the FCA’s regulatory perimeter. It considers where cryptoassets would constitute specified investments under the Regulated Activities Order (RAO), financial instruments such as transferable securities under the revised Markets in Financial Instruments Directive (MiFID II), or whether they would be subject to the Payment Services Regulations 2017 or the Electronic Money Regulations 2011. It also covers where cryptoassets would not come under the definition of “specified investments” under the RAO.

Additionally, the FCA sets out the wider context to the proposed guidance by explaining the key concepts related to cryptoassets. It also provides an overview of the UK market, its assessment of harm and the action it has taken so far.

The FCA also informs firms that HMT will publish a consultation paper in early 2019 discussing legislative change, which could potentially broaden the ’FCA’s regulatory remit to bring in further types of cryptoassets. Furthermore, it also indicates on its new cryptoassets webpage that it will be issuing the following additional publications during 2019:

  1. consumer research on cryptoassets (early 2019);
  2. a policy statement on cryptoassets in response to the FCA’s consultation on cryptoassets (summer 2019); and
  3. a consultation on potentially banning the sale of derivatives linked to certain cryptoassets to retail customers (2019).

The FCA’s consultation closes on April 5.

The FCA’s consultation paper is available here.

The FCA’s new cryptoassets webpage is available here.