FCA Finalizes Guidance on Types of Cryptoassets It Will Regulate
01 Aug 2019

The United Kingdom’s Financial Conduct Authority (FCA) finalized a policy statement Wednesday on the kinds of crypto-related products that fall under its regulatory remit.

The final guidance, which does not address pending anti-money laundering (AML) obligations for crypto-related firms, clarifies that the FCA has supervisory authority over security tokens, which function similarly to specified investments, and certain utility tokens that serve as e-money. Cryptocurrency exchanges, however, fall outside of the agency’s purview, according to the guidance.

“If you are an exchange, and all you do is facilitate transactions of Bitcoins, Ether, Litecoin or other exchange tokens between participants, you are not carrying out a regulated activity,” the FCA said.

In practice, the FCA will assess whether a cryptoasset is subject to regulation on a “case-by-base basis, with reference to a number of different factors,” according to the guidance.

The policy paper separately notes that some companies in the cryptoasset sector will be regulated for AML purposes under the EU Fifth Anti-Money Laundering Directive, which is expected to be transposed into UK law by January. The transposition will impose AML rules on cryptocurrency exchanges, crypto-ATMs, issuers of crypto-assets and other firms.

UK officials have previously disclosed plans to impose additional AML requirements on the sector and the FCA, which has been charged with enforcing the rules, will publish a consultation paper later this year, the agency said in Wednesday’s guidance.

Read the full guidance here

Read more:

Virtual Assets Are Here To Stay, But Are AML Professionals Up to Speed?

Global money-laundering watchdog launches crackdown on cryptocurrencies

Financial crime: UK announces consultation on bitcoin, cryptoassets guidance

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