The Financial Conduct Authority (FCA) has published a document proposing to classify cryptoactive assets into three categories and apply existing legal provisions to them.
According to representatives of FCA, cryptoactives carry potential risks for consumers and investors. Legal clarity in this area will help companies conduct business without violating existing legislation.
“This is a small but growing market. And we want industry companies and consumers to clearly understand what is regulated and what is not , ”said FCA General Director for Strategy and Competition Christopher Woolard.
The Office classifies such cryptocurrencies as Bitcoin and Litecoin into the category of “exchange tokens”. The FCA clarifies that such coins do not belong to investment objects and are not recognized in the UK as a means of payment. In addition, these assets are more volatile than, for example, commodities or fiat currencies. Buying and selling “exchange tokens” is not regulated by FCA.
However, security tokens relate to investment instruments in accordance with the Financial Services and Markets Act and the European Directive on Financial Instruments Market (MiFID II). For such tokens, the same rules apply as for traditional securities. Security token issuers must contact FCA for permission.
Utility tokens, under certain circumstances, are electronic money. In most cases, such assets are not regulated by FCA, since, as a rule, they do not have the properties of securities.
Stablecoins in some cases may fall under the definition of electronic money. For example, if they are “backed up by certain assets, a basket of cryptoactive assets, or controlled by algorithms that regulate the supply of tokens”.
FCA will now collect public comments on proposed regulatory measures. This stage will last until April 5th.
Earlier, BlockchainJournal reported that FCA is investigating the activities of 50 cryptocurrency companies that operated without a license.
Also recall that the FCA does not exclude the prohibition of cryptocurrency derivatives and CFDs .
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