UK’s FCA to consult on regulatory perimeter guidance for cryptoassets by end of 2018

The Financial Conduct Authority (FCA), a financial regulatory body in the United Kingdom, is going to consult on crypto perimeter guidance by the end of this year, Christopher Woolard, Executive Director of Strategy and Competition at the FCA said recently.

Speaking at the Regulation of Cryptocurrencies event, London, Woolard shed light on the conclusions from the cryptoassets taskforce formed earlier this year between the FCA, HM Treasury and the Bank of England. The taskforce released a report on the country’s policy and regulatory approach to cryptoassets last month.

According to the transcript of the speech, the perimeter guidance will help firms better understand the boundaries of current regulation in relation to cryptoassets.

“The FCA will consult on perimeter guidance by the end of 2018. This will help clarify which cryptoassets fall within the FCA’s existing regulatory perimeter, and those cryptoassets that fall outside,” Woolard said.

“HM Treasury is to then consult on whether the regulatory perimeter requires an extension to capture cryptoassets that have comparable features to specified investments, but currently fall outside the perimeter.”

Further noting the sale of “complex, volatile and often leveraged derivatives products based on exchange tokens with underlying market integrity issues” to retail consumers, Woolard said that the FCA will “also consult on a prohibition of the sale to retail consumers of derivatives referencing certain types of cryptoassets (for example, exchange tokens), including contracts-for-difference, options, futures and transferable securities.”

In order to fight financial crime risks related to cryptoassets, the Treasury will consult and then legislate on how to transpose fifth EU Anti-Money Laundering Directive (5AMLD) and broaden the scope of anti-money laundering and counter-terrorism financing (AML/CFT) regulation further.

Woolard further said that the taskforce found that exchange tokens present new challenges to traditional forms of financial regulation. As such, the Treasury plans to further analyse “whether regulation could meaningfully and effectively address the risks posed by exchange tokens and what, if any, regulatory tools would be most appropriate.”

“HMT will consult in early 2019 on whether and how exchange tokens, as well as related actors such as exchanges and wallet providers, could be regulated effectively,” he added.