The leading financial watchdog in the UK, the Financial Authority Conduct (FCA) will not regulate bitcoin (BTC) and ether (ETH). The agency unveiled this news yesterday through an official document. This move comes after the FCA worked on cracking down unlicensed crypto projects and scams throughout the previous year and the better part of this year.
Titled “PS19/22: Guidance on Cryptoassets,” the document has a new version of a crypto consultation paper. The agency availed this paper to the public earlier this year for comment. Per the document, the FCA considers ETH and BTC as exchange tokens. This means the coins are decentralized and work as exchange mediums.
The regulator noted,
…we consider these tokens to be outside the regulatory perimeter. This means that market participants like crypto exchanges, which only provide a platform for the trading of exchange tokens (like Bitcoin, for example), are outside our remit.
Stablecoins and Utility Coins Set to be Regulated
While the watchdog stated that it won’t control BTC and ETH, it concluded that security tokens and utility tokens fall within its scope. As a result, the agency can regulate them. Per the entity, security tokens are like securities.
On top of this, the document states that the FCA can control utility tokens if they fall under the e-money class.
The agency noted that the same logic applies to stablecoins. However, it went on to explain that not all stablecoins fall under the e-money class.
Crypto Service Providers
The newly published document contains similar rules to the ones proposed in the CP19 consultation paper. According to the FCA, it received 92 responses to the paper. The watchdog added that most of the respondents were supportive of the suggestions.
To that end, the entity noted that the new document provides clarity when it comes to classifying crypto coins. The FCA added that participants in the crypto market should use this document as a guide for understanding how to treat certain coins. Nonetheless, it further cited that it could only reach conclusive judgments through a case-by-case basis.
Christopher Woolard, FCA’s executive director of strategy and competition said,
This is a small, complex and evolving market covering a broad range of activities. Today’s guidance will help clarify which crypto-asset activities fall inside our regulatory perimeter.
Do you think the FCA should exclude stablecoins from its regulatory scope? Let us know in the comments below.