FCA Launches Consultation Paper on Crypto Asset Guidance

The Financial Conduct Authority (FCA) Financial Conduct Authority (FCA) The Financial Conduct Authority (FCA) is the largest financial regulator for all financial markets in the United Kingdom (UK).The UK regulator is responsible for the conduct of firms authorized under the Financial Services and Markets Act 2000. Moreover, the FCA is also responsible for the regulation of behavior in retail and wholesale financial markets, supervision of the trading infrastructure that supports those markets, and the prudential regulation of firms not regulated by the PRA. Its rol The Financial Conduct Authority (FCA) is the largest financial regulator for all financial markets in the United Kingdom (UK).The UK regulator is responsible for the conduct of firms authorized under the Financial Services and Markets Act 2000. Moreover, the FCA is also responsible for the regulation of behavior in retail and wholesale financial markets, supervision of the trading infrastructure that supports those markets, and the prudential regulation of firms not regulated by the PRA. Its rol Read this Term) has today released a consultation paper on the “Guidance of Cryptoassets,” which once finalized, will outline the crypto asset activities it regulates.

Once market feedback has been received, the final Guidance will allow market participants to better understand if the crypto assets they use are within the regulatory perimeter.

It will further outline whether businesses operating within the nascent cryptocurrency industry need to be authorized and what rules or regulations apply to their business.

Specifically, the guidance takes a look at where crypto assets would be considered as: “‘Specified Investments’ under the Regulated Activities Order (RAO), ‘Financial Instruments’ such as ‘Transferable Securities’ under the Markets in Financial Instruments Directive II (MiFID II MiFID II MiFID II stands for the Markets in Financial Instruments Directive, and is the second iteration of a sweeping directive. As such it is known as MiFID II. The original Markets in Financial Instruments Directive (MiFID) became effective in November 2007. It was intended as the foundation of the EU’s Financial Services Action Plan, a comprehensive project to create a single European market in financial services. MiFID is intended to create a level playing field for firms to compete in the EU’s fina MiFID II stands for the Markets in Financial Instruments Directive, and is the second iteration of a sweeping directive. As such it is known as MiFID II. The original Markets in Financial Instruments Directive (MiFID) became effective in November 2007. It was intended as the foundation of the EU’s Financial Services Action Plan, a comprehensive project to create a single European market in financial services. MiFID is intended to create a level playing field for firms to compete in the EU’s fina Read this Term), or captured under the Payment Services Regulations (PSRs), or the E-Money Regulations (EMRs). It also covers where cryptoassets would not be considered ‘Specified Investments’ under the RAO.”

FCA aims to create greater clarity in the crypto sector

According to the FCA, the consultation paper is in response to the industry’s need for greater clarity. It also follows on from the UK crypto asset Taskforce’s recommendation that the British watchdog provide additional guidance on the current regulatory perimeter.

Before the guidance can be finished, the FCA is seeking feedback from market participants. From today, the regulator has allowed a consultation of 10 weeks, with the consultation period ending on April 5, 2019.

Commenting on the consultation paper, Christopher Woolard, the executive director of Strategy and Competition at the FCA, said: “This is a small but growing market and we want both industry and consumers to be clear what is regulated, and what isn’t. This is vital if consumers are to know what protections they’ll benefit from and in ensuring we have a market functioning as it should.”

Overall, the guidance is to create clarity in the crypto industry in order to better protect retail investors. While the sector is still relatively small, the number of investors, particularly retail traders, is growing.

After the consultation period has closed, the FCA will publish the feedback and final text of the guidance in the summer of 2019, the statement said.