UK Financial Regulator Releases Consultation Paper on Crypto

The United Kingdom's financial regulator has published a consultation paper titled "Guidance on Cryptoassets" today, Jan. 23.

The stated goal of the Financial Conduct Authority's paper on cryptocurrency is to provide more regulatory clarity on the subject for market participants.

The consultation period on crypto, which the paper initiates, is scheduled to end on April 5, 2019, after which a policy statement with final guidance is set to be released.

In the paper, the FCA outlines various possible definitions of crypto assets and applicable U.K. laws.

In particular, the guidance paper notes that crypto assets could be considered "Specified Investments" under the state's Regulated Activities Order or "Financial Instruments" regulated by the Markets in Financial Instruments Directive II. The regulatory body also mentions that such assets could be regulated by the E-Money Regulations or Payment Services Regulations.

The FCA's crypto asset guidance places cryptocurrencies into three potential categories, namely exchange tokens, security tokens and utility tokens.

Security tokens, on the other hand, are assets that likely fall under RAO and are "Within the perimeter" of FCA's regulations.

Finally, coins referred to as utility tokens are those that give users access to a product, but do not grant the same rights as security tokens.

As Cointelegraph reported in December last year, the FCA then revealed that it is investigating 18 companies over cryptocurrency use.

The U.K. tax collection service published its first detailed tax legislation for private cryptocurrency holders following a lengthy consultation period.