Cryptocurrencies have been a thing for a while now, but Facebook wading into the market with Libra seems to have lit a fire under the arse of regulators everywhere.
The FCA has issued a policy statement following its consultation paper published earlier this year that aimed to "provide clarity on the FCA’s regulatory perimeter for market participants carrying on activities in this area."
The FCA received over 90 responses from bodies within the financial services sector and then some, most of which supported the proposals in the consultation paper, so it's going ahead with those and tweaking a few bits here and there for clarification.
"While the Final Guidance does not differ significantly from the drafts we consulted on, we have reframed the taxonomy to better reflect market observations and ensure our Guidance is clear and accurate. We have also provided further clarity on tokens commonly referred to as ‘stablecoins’. Minor drafting changes have been made throughout the Guidance, particularly to provide more clarity where tokens might be e-money," it reads.
The likes of Bitcoin will be classified as exchange tokens and won't be regulated, but will still be subject to anti-money-laundering rules.
Exchange tokens are "those types of cryptoasset that are usually decentralised and primarily used as a means of exchange. These tokens are sometimes known as ‘cryptocurrencies’, ‘crypto-coins’ or ‘payment tokens’. These tokens are designed to provide limited or no rights for tokens holders, and there is usually not a single issuer to enforce rights against."
The policy points out that "Cryptoassets can take many forms and be structured in different ways. Although we recognise three broad categories of cryptoassets: e-money, security and unregulated tokens, they may move between categories during their lifecycle," adding that they'll have to be evaluated on a "case-by-case basis" to determine which category they should fall into.
It's a pretty lengthy document and includes the feedback the FCA received on its consultation paper, the amendments it will be making, and even has a handy Q&A section for you, so it's worth checking out if you're in the business of cryptocurrencies. [TNW]
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