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Dear CEO: Cryptoassets & Financial Crime
25th June 2018
Continuing the Trend: Cryptocurrencies in Focus
Dear CEO Letter on Cryptoassets and Financial Crime
Continuing this trend, the FCA issued a ‘Dear CEO’ letter to Banks that aims to advise upon applying good practices in relation to Cryptocurrencies and Financial Crime.
Their letter, entitled ‘Cryptoassets and Financial Crime’, informs that there are “many non-criminal motives for using cryptoassets”, however the FCA goes on to advise Banks to take “reasonable and proportionate measures” to ensure that their institutions are not facilitating financial crime since cryptocurrencies can pose a higher risk as they can offer anonymity as well as easy movement between countries.
“Where you offer banking services to current or prospective clients who derive significant business activities or revenues from crypto-related activities, it may be necessary to enhance your scrutiny of these clients and their activities”
FCA, Dear CEO Letter ‘Cryptoassets and Financial Crime’ June 2018
The FCA have said that “Digital currencies are not currently regulated by the FCA” However if “the underlying reference asset in a financial derivative, transferable security or collective investment scheme” is a digital currency then “the activities of firms relating to these instruments may well be subject to regulation” (FS17/04 December 2017).
For greater clarity on cryptocurrency products, the FCA has defined these in their latest Statement
Firms should therefore be reminded that it is their responsibility to ensure that they have the appropriate authorisation and permissions to carry on regulated activity.
If you are considering the effectiveness of your current approach to so called cryptocurrencies, your regulatory requirements or have a practical compliance challenge that you would like support or advice upon, we would be delighted to hear from you. Just drop an email to our regulatory support team.
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Comment from the FCA:
“Digital currencies are not currently regulated by the FCA but, if they are the underlying reference asset in a financial derivative, transferable security or collective investment scheme, the activities of firms relating to these instruments may well be subject to regulation”
FCA Feedback Statement FS17/04