The UK Financial Conduct Authority ("FCA") has recently published its ‘Guidance on Cryptoassets - Feedback and Final Guidance to Consultation Paper CP 19/3 (the "Guidance"). The Policy Statement followed the ‘Guidance on Cryptoassets’ - Consultation Paper CP 19/3 (the "Consultation Paper") also issued by the FCA in January 2019, where the latter consulted on draft guidance based on difference categories of cryptoassets initially defined in the UK Cryptoassets Taskforce, following which the Policy Statement was issued according to the participants’ answers.
The purpose of this Guidance was to set out the FCA’s position on cryptoassets in relation to the regulatory perimeter, aimed to give market participants and interested stakeholders clarity on the types of cryptoassets that fall within the FCA’s regulatory remit, and the resulting obligations on firms.
This Guidance provides greater clarity as to when tokens might be classified as ‘e-money’ and therefore fall within the scope of the regulatory perimeter on that basis. This new category is different and therefore separate from the utility tokens and security tokens category.
The Policy Statement also touched up on some other matters relating to cryptoassets which include stablecoins, airdrops, payment services, prospectus and listing transparency requirements and guidance on exchange platforms.
Previously, the Consultation Paper set out three categories of cryptoassets comprising of ‘exchange tokens’, ‘security tokens’ and ‘utility tokens’, also concluding that cryptoassets are typically used as a means of exchange, for investment or to support capital raising and/or the creation of decentralised networks. In this regard, the Guidance categorised cryptoassets into two categories: regulated and unregulated tokens. The Consultation Paper also outlined specific shortcomings of cryptoassets especially ones relating to risks to consumers, harm through financial crime and harm to market integrity. However, the Guidance also suggested ways of how to address these drawbacks.
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