On October 29, the UK “Cryptoasset Taskforce,” consisting of HM Treasury, the UK Financial Conduct Authority (FCA) and the Bank of England, published its final report setting out the United Kingdom’s policy and regulatory approach to cryptoassets and distributed ledger technology (DLT) in financial services. The Cryptoassets Taskforce was established in March 2018 as part of the United Kingdom’s strategy on the financial technology (FinTech) sector (for further details see the March 23edition of the Corporate & Financial Weekly Digest).
The report provides an overview of cryptoassets and DLT, assesses their associated risks and potential benefits, and sets out next steps regarding UK regulation. It also commits the relevant regulators to taking actions that will, for example, allow innovators in the financial sector to thrive if they comply, and that will maintain the UK’s international reputation as a safe and transparent place to do business in financial services. The report suggests the following actions, among others, to be taken by the relevant regulators:
- By the end of 2018, the FCA is to consult on guidance to clarify which cryptoasset activities are or should be regulated;
- By the end of 2018, the FCA is also to consult on potentially prohibiting the sale of derivatives based on cryptoassets to retail investors; and
- HM Treasury is to consult on transposing the Fifth Money Laundering Directive in the New Year and introduce new legislation in 2019, to further broaden the scope of anti-money laundering and counter-terrorism finance regulation.
The Cryptoassets Taskforce will also convene every six months to continue to monitor market developments and regularly review the United Kingdom’s regulatory approach to cryptoassets and DLT.
The final report is available here.