UK financial regulator the Financial Conduct Authority (FCA) has announced that it is today consulting on guidance, which, once finalised, will set out the cryptoasset activities it regulates.
With this move, the regulator aims to help firms understand whether their cryptoasset activities fall under FCA regulation.
Christopher Woolard, FCA
Christopher Woolard, executive director of Strategy and Competition at the FCA, commented:
This is a small but growing market and we want both industry and consumers to be clear what is regulated, and what isn’t. This is vital if consumers are to know what protections they’ll benefit from and in ensuring we have a market functioning as it should.
Yesterday, LeapRate reported that the FCA is stepping up investigations of cryptocurency companies. Per one report:
The FCA had started probes into 67 firms but inquiries into 49 of them have now been closed. Of these 49, 10 saw the investigations into them ended because either the FCA failed to get enough evidence necessary to advance the case or because the firm had received a warning informing it that it needed authorisation in order to continue operations. The six months from May to November last year saw the number of FCA cryptocurrency investigations double.
Back in 2018, the regulator reminded that cryptocurrency CFDs require license, but not cryptos themselves.
The FCA warned about the risks of investing in cryptocurrency CFDs two years ago.
Responding to the announcement, Kingsley Napley partner Jill Lorimer, commented:
This consultation follows the commitment made in the report produced by the UK Cryptoassets Taskforce last year to provide extra clarity to firms regarding the boundaries of regulation insofar as cryptoasset activities are concerned. It is also part of a broader strategy to make the UK a safe place to do business and hostile to financial crime.
It will be warmly welcomed by firms who are currently operating in this space, or who seek to do so. A clear regulatory framework is absolutely essential to the UK maintaining its position as one of the most attractive destinations for cryptoasset innovation. It will give investors much-needed comfort and help to attract more interest in the sector. In effect regulation will help crypto come of age.
Given the current uncertainties around Brexit, it is hugely commendable that the FCA and its sister authorities are grappling with this difficult and complex issue .The UK is already ahead of other jurisdictions in the number of crypto operators and users it has spawned. Greater rules to govern this area of business will help to further legitimise and grow the industry at a time which must be very welcome to the UK financial services sector.
Later this year the FCA will consult on banning the sale of derivatives linked to certain types of cryptoassets to retail investors. The Government is planning to consult on whether to expand the regulatory perimeter to include further cryptoassets activities.