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The UK government-backed Cryptoasset Taskforce has released a report on the country’s policy and regulatory approach to cryptoassets.
In March, Chancellor of the Exchequer, Philip Hammond, announced the task force as part of the government’s Fintech Sector Strategy. It consists of HM Treasury, the Bank of England (BoE), and the Financial Conduct Authority (FCA) and held its first meeting in May.
The final report, published on October 29, provides an overview of cryptoassets and the underlying technology, assesses the associated risks and potential benefits, and sets out the path forward with respect to regulation in the UK.
The taskforce noted that while cryptoassets can bring benefits to markets, firms and consumers, there are considerable risks such as harm to consumers and market integrity, potential to be used for illicit activities, and potential future threats to financial stability.
In order to mitigate these risks, the taskforce has committed to a number of actions. First and foremost, it will issue “perimeter guidance” by the end of this year to clarify “which cryptoassets fall within the existing regulatory perimeter, and those cryptoassets that may fall outside.”
The taskforce will also consider whether to extend this regulatory perimeter to include cryptoassets that have comparable features to specified investments, but currently fall outside the perimeter.
It also plans to conduct a separate consultation by Q1 2019 on a potential prohibition of the sale to retail consumers of derivatives (including contracts for differences, options, and futures) referencing certain types of cryptoassets.
In addition, the government will issue a consultation in early 2019 to further explore whether and how exchange tokens, and related firms such as exchanges and wallet providers, could be regulated effectively.
The taskforce plans to implement “one of the most comprehensive responses globally to the use of cryptoassets for illicit activities by applying and going further than the fifth EU Anti-Money Laundering Directive.”
