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UK’s stance on crypto assets has finally been elucidated by the Financial Conduct Authority (FCA). This regulatory body, which is responsible for regulating the country’s economy, has stated clearly in a paper which digital currencies it will be liable for. Perhaps quite surprisingly, Bitcoin and Ethereum are NOT within the watchdog’s purview.
This FCA’s statement has been a response to a consultation paper which was published previously in January.
The paper published by the FCA evoked over 90 responses from different financial service bodies; particularly, trade associations, banks and crypto exchanges. The British regulator claimed that most of the responses were in favor of the proposals suggested.
The report clearly states:
“Following our consultation, we are proceeding with the guidance that was consulted on, with some drafting changes to improve clarity based on responses. This includes reframing our taxonomy of crypto assets to help market participants better understand whether tokens are regulated, and where they fall outside our remit.”
Furthermore, the latest policy introduced by the FCA illustrates some several important definitions and clarifies some of the previous doubts related to cryptocurrencies in the UK. For instance, the new policy clarifies that some major cryptocurrencies, including Bitcoin(BTC)trade and Ethereum (ETH)trade, will not be regulated and instead will only abide by anti-money-laundering regulations.
In addition to this, the statement by the FCA further clarifies that “security tokens” which belong to the FCA’s “specified investment” category will now fall under the watchdog’s sphere.
According to FCA’s policy, utility tokens will no long fall under FCA’s remit. However, only when they can be specified as electronic money they would fall under the FCA’s control in the recently-introduced category of e-money tokens. This also implies that some stablecoins which can be classified as electronic money will fall under the new category of e-money tokens and thus will be under FCA’s supervision.
Christopher Woolard, the FCA‘s executive director of strategy and competition, elaborating on FCA’s latest policy said:
“This is a small, complex, and evolving market covering a broad range of activities. Today’s guidance will help clarify which crypto asset activities fall inside our regulatory perimeter.”
It is important to mention that in the beginning of July, the FCA recommended to ban some investments products that were associated with cryptocurrency in order to ensure customers’ safety. This crypto ban proposal was suggested in order to secure investors as they were unable to deduce the values and risks of cryptocurrency products.
According to an FCA’s statement back then, crypto derivatives and exchange–traded notes (ETNs) were “ill-suited to retail consumers who cannot reliably assess the value and risks.” It’s fascinating to see that now the FCA indicates that Bitcoin and Ethereum are digital assets whose value and risks could be assessed by the public.