Another global regulator has issued their official opinion on digital assets, and the results are a bit mixed. The U.K.’s Financial Conduct Authority (FCA) have finalized their guidance on the topic and issued the results on July 31.
In their opinion, exchange token cryptocurrencies, with SegWitCoin (BTC) and ethereum being the two examples given, are currently unregulated, although anti-money laundering laws still apply to them. As a result, many of the activities that surround these cryptos, like buying and selling them on exchanges, are not covered by any U.K. laws and are basically a buyer-beware type scenario.
Security tokens though met their definition of a “specified investment.” As such, they are regulated by the FCA, and run the risk of upsetting authorities if they don’t operate within the boundaries of U.K. law.
Utility tokens, because they don’t offer the same rights as security tokens, did not meet any standard the FCA would consider within their jurisdiction.
Stablecoins may fall under the FCA’s jurisdiction, as they could be considered as e-money, however it entirely depends on the specifics of how the digital asset is issued.
However, that doesn’t mean that using cryptos or any of these types of tokens would take you out the FCA’s supervision or jurisdiction. They wrote:
Any token that is not a security token, or an e-money token is unregulated. However, market participants should note certain activities that use tokens may nevertheless be regulated, for example, when used to facilitate regulated payments.
This opinion from the FCA helps provide a lot of clarity on the current situation of digital assets in the U.K., but that’s not necessarily a comforting picture. It’s great to know what types of tokens are currently regulated, and to what degree.
What it doesn’t do though is provide a lot of confidence to potential investors, or those hoping to stamp out the criminality of the dark coin sector. With many cryptocurrencies now being officially labeled as outside the remit of the FCA, dark coin promoters may now feel a little bit more confident in peddling their wares, regardless of the utility or criminality of their token.
What needs to happen next is for U.K. lawmakers and regulators to assess the situation and protect their citizens and businesses from the dark side of crypto land. The U.K. and the crypto space will both suffer as long as a lack of regulation suppresses legitimate development.
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.