FCA UK Released Regulation Guide for Cryptoactives

The Financial Supervision Authority of the United Kingdom (FCA) has released a revised guide to cryptoactive assets, specifying which tokens fall under its jurisdiction.

Most of the regulations issued this Wednesday were proposed in the consultation document CP19, which was published
for public comment in January. As expected, the final guide does not fundamentally change the regulatory framework, but specifies when certain types of cryptoactive assets fall under existing categories.

FCA reports that about 92 responses to a consultation document were received from a number of firms, including banks, trade associations, and cryptocurrency exchanges. Most respondents supported the proposals of the regulator, the FCA said.

It is important to note that the guide defines tokens. When issued, these assets behave like stocks or debt instruments, including property rights, and thus fall into the category of “certain investments” and, in turn, fall within the competence of the FCA.

Instrumental tokens, in contrast, do not provide the same types of rights as regulated financial instruments, and usually fall outside the scope of FCA’s authority, unless they meet the definition of electronic money and fall into the new category of electronic money tokens. The regulator declares:

“Any token that is not a token-share or electronic money token is not regulated. However, market participants need to remember that certain activities that use tokens can be regulated, for example, when they are used to make regulated payments. ”

At the same time, some stablecoins may also meet the definition of electronic money and, therefore, will also be subject to supervision by the FCA, whose authority is to protect consumers and investors.

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The third definition, “exchange tokens,” includes cryptocurrencies, such as ether and bitcoin, which are not regulated by FCA, although the rules for countering money laundering apply to them. At the same time, the regulator noted that “market participants should use the Guide as a first step in understanding how they should handle certain cryptoactive assets. However, the final decision will be made only in each case. “

FCA Executive Director for Strategy and Competition Christopher Woolard said in a statement:

“This is a small, complex and growing market, covering a wide range of activities. The guide will help clarify which operations with cryptoactive assets fall within our jurisdiction. ”

A firm may issue stock tokens without obtaining a license from the regulator. But in any scenarios in which tokens are traded, advisors and brokers should receive permission, the FCA notes. According to the regulator, if tokens-shares are sold on the capital market, they will also be treated as transferable securities in accordance with the European Union Instrument for Financial Instruments Markets (MiFID).

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FCA notes that additional clarity is needed in the classification of tokens, and states that it will separate electronic money tokens from instrumental tokens and token shares.

“This will create a specific regulated category of electronic money tokens and an unregulated category that includes instrumental tokens,” the regulator said.

Recently, the UK government announced
A new plan to combat economic crime for the years 2019-2022, which includes actions related to cryptocurrency. In addition, in July, the FCA undertook
another step towards the prohibition of derivatives based on cryptocurrencies in order to protect investors from financial damage.