Financial crime: UK announces consultation on bitcoin, cryptoassets guidance
24 Jan 2019

Britain’s Financial Conduct Authority (FCA) has launched a consultation into guidance on the cryptoasset activities it regulates.

The watchdog said the move is aimed at providing clarity for firms about whether their cryptoasset activities fall under its regulation, and [for them to] ensure they are compliant and have appropriate consumer safeguards in place.

The issue of the regulation of crytpoasets – which include virtual currencies such as bitcoin and security tokens – has been a key issue on the global regulatory scene following several reports of consumers falling victims to scams, multi-million dollar thefts and concerns that the assets are linked to money laundering and other criminal activities on the dark web.

The FCA has already issued warning to the public to exercise caution regarding crypto investments.

The new consultation comes after an industry request for greater clarity, and is in response to the UK Cryptoasset Taskforce’s recommendation that the FCA provides additional guidance on the existing regulatory perimeter.

“While numbers are still relatively small, an increasing number of consumers are investing in cryptoassets. As the FCA has previously made clear, consumers should approach cryptoassets with caution and be prepared to lose money,” the FCA said in a statement.

“Consumers may be unaware of the limited regulatory protections for cryptoassets services that fall outside the FCA’s regulatory remit, such as the lack of recourse to the Financial Services Compensation Scheme and the Financial Ombudsman Service.”

The FCA said it is looking to consult later this year on banning the sale of derivatives linked to certain types of cryptoassets to retail investors.

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