UK financial regulator publishes cryptoassets regulation guide

On July 31, 2019, the UK financial regulator issued the Final Guide to Cryptoassets to give clarity for market participants regarding the types of cryptoassets that fall within the scope of the FCA (Financial Conduct Authority), as well as those cryptoassets that are outside the FCA regulatory perimeter. Let’s see what this means for companies and consumers. 

According to the October 2018 Cryptoassets Taskforce report, there are three types of crypto assets: exchange, utility, and security tokens. This division of tokens was the most popular in most European countries, but now the UK financial regulator proposed a new one.

1. Regulated tokens

2. Unregulated tokens

Regulated tokens include security tokens and utility tokens, a new category of cryptoassets. Unregulated tokens include exchange, utilities and other tokens.

1. Security tokens: digital analogues of securities that certify ownership and give owners the right for realization of their investment interests. They remain within the regulatory perimeter.

2. Electronic money tokens: this category refers to any token that meets the definition of electronic money. These tokens are subject to the Electronic Money Regulation, and issuers must ensure that they have the appropriate permissions and that they comply with legal rules and regulations. This category previously belonged to the token utility category. These tokens are a subject to FCA regulation.

3. Unregulated tokens: this category refers to any token that does not meet the definition of security tokens and electronic money tokens.

These tokens, for example, can be issued centrally or be decentralized, provide access to the current or proposed product or service in one or more networks and ecosystems, or used as a mean of exchange. They can be fully portable or have limited tolerance. These tokens go beyond regulation.

As for the next steps, FCA expects market participants to take the final review guide and start using it.

We warn that consumers should be careful when investing in crypto assets and make sure that they understand and can bear the risks associated with assets that do not have intrinsic value.

We recommend you to be careful when determining the type of your token, as it is necessary to understand if your token is a subject to regulation or not. In order foe you to avoid any additional challenges, we are always happy to provide you with advice and answer of your additional questions.