UK Financial Conduct Authority: We Will Not Regulate Bitcoin and Ether
The British Financial Conduct Authority (FCA) has confirmed that they will not be regulating cryptocurrencies such as Bitcoin and Ether as it falls out of their perimeter.
The FCA first issued a finalized policy statement on digital assets titled “PS19/22: Guidance on Cryptoassets”. This policy statement update is in response to the feedback received from the previous policy statement issued in January. The objective of the final guidance is to bring more clarity on the regulation for the existing types of digital assets.
Bitcoin and Ether, which are considered major cryptocurrencies, are classified as “exchange tokens.” These exchange tokens are not backed by any central authority and are usually decentralized and primarily used as a means of exchange. The FCA has stated that they will not be regulating exchange tokens. However, Anti-Money Laundering regulations still apply.
Security tokens and utility tokens have been classified to fall under the regulatory perimeter and may be regulated as stated by the FCA. Security tokens that have features that provide rights and obligations to specific investments such as shares or debt instruments. Utility tokens, on the other hand, maybe regulated if they meet the definition of electronic money or a security token.
It was suggested in the statement that market participants should use the guidance as to the first step in understanding how they should treat cryptocurrencies. However, definitive judgments can only be made on a case-by-case basis.
Image via Shutterstock