UK regulator says some cryptocurrency-linked services likely require authorisation
08 Apr 2018

Regulated activities in relation to derivatives that reference either cryptocurrencies or tokens issued through an initial coin offering (ICO), will likely require authorisation by the Financial Conduct Authority (FCA), the regulator announced on Friday.

Although cryptocurrencies are not currently regulated by the FCA – provided they are not part of other regulated products or services – cryptocurrency derivatives are “capable of being financial instruments under the Markets in Financial Instruments Directive II (MIFID II),” the FCA said.

“It is likely that dealing in, arranging transactions in, advising on or providing other services that amount to regulated activities in relation to derivatives that reference either cryptocurrencies or tokens issued through an initial coin offering (ICO), will require authorisation by the FCA,” it stated.

This includes:

  • cryptocurrency futures – a derivative contract in which each party agrees to exchange cryptocurrency at a future date and at a price agreed by both parties
  • cryptocurrency contracts for differences (CFDs) – a cash-settled derivative contract in which the parties to the contract seek to secure a profit or avoid a loss by agreeing to exchange the difference in price between the value of the cryptocurrency CFD contract at its outset and at its termination
  • cryptocurrency options – a contract which grants the beneficiary the right to acquire or dispose of cryptocurrencies

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