The Financial Conduct Authority (FCA) has published new guidance regarding the different types of digital currencies it regulates.
The new guidelines are a result of a consultation the FCA held earlier in 2019. This consultation asked the public to weigh in on different proposals on how to best regulate the crypto market.
It received 92 responses from the financial services sector. The respondents included large banks, trade associations, consultancies, FinTech companies, cryptoasset exchanges, technology firms, academia and token issuers. Having looked at the responses, the FCA concluded that most of these responses were in line with the proposals.
Christopher Woolard, executive director of Strategy and Competition at the FCA, commented, “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.”
The guidelines will be relevant to firms issuing or creating cryptoassets, firms marketing cryptoasset products and services, firms buying or selling cryptoassets, firms holding or storing cryptoassets, professional advisers, investment managers, recognised investment exchanges, multi-lateral trading facilities and organised trading facilities, and consumers and consumer organisations.
They cover security tokens. The FCA defined them as the kind of tokens providing rights and obligations akin to specified investments as set out in the Financial Services and Markets Act 2000 (Regulated Activities) Order (RAO). That also include those that serve as financial instruments under Markets in Financial Instruments Directive (MiFID II).
E-tokens, which are essentially electronic money, will also be covered by the new guidelines.
However, the FCA’s new guidelines will not cover unregulated cryptocurrencies like Bitcoin and Ether.
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