UK’s Financial Watchdog, the Financial Conduct Authority (FCA), released the finalized version of its crypto-asset guidelines, clarifying which assets do and do not fall under its jurisdiction. UK’s Finance Watchdog Provides Clarity on Crypto Assets.
The widely anticipated final guidance does not drastically change the regulatory landscape, but does specify the certain kinds of crypto assets which fall under current categories.
Most of the regulations published last week were suggested in the consultation document CP19, which was published in January for public comment. The FCA said that a variety of companies, including banks, trade associations, and crypto exchanges, received about 92 replies to the consultation document.
Cryptocurrencies like bitcoin and ether, are not governed by the FCA classes “exchange tokens,” though anti-money laundering laws still apply.
A definition of security tokens is provided in the guidance. These assets, when issued, act like stocks or debt instruments, including property rights, thus falling within the category of a “specified investment” and, in turn, the remit of the FCA.
Although utility tokens are not “specified investments”, they may meet the definition of e-money in certain circumstances, in which case, activities related to them may be within the perimeter.
The agency said:
“Any token that is not a security token, or an e-money token is unregulated. However, market participants should note certain activities that use tokens may nevertheless be regulated, for example, when used to facilitate regulated payments.”
However, some stablecoins may also fulfill the definition of e-money and would therefore also be subject to FCA supervision.
In a statement executive director of Strategy and Competition at the FCA, Christopher Woolard, said :
“This is a small, complex and evolving market covering a broad range of activities. Today’s guidance will help clarify which cryptoasset activities fall inside our regulatory perimeter.”
A company can issue security tokens without a regulatory permit, just as issuing stocks do not require a permit. However, in any scenario where the tokens are traded, the token controlling advisors and brokers, and the financial promotion scheme will need permission.
If a security token can be traded on the capital market, the FCA said, it will also be considered transferable security under the Financial Instruments Markets Directive (MiFID) of the European Union, and that rule will also apply.