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Government Proposed Approach to Cryptoassets Regulation
Governments Proposed Approach to Cryptoassets Regulation considered by the FCA Board.
20th May 2019
At a meeting of the board of the FCA the other month, the regulator discussed the Government’s proposed plans to implement measures for the regulation and supervision of cryptoassets.
HM Treasury is currently consulting on domestic legislation for cryptoassets and proposes to implement an anti-money laundering regime for certain cryptoassets activities by next January, 2020, in accordance with the EU’s 5MLD regime.
Furthermore, it seems that HM Treasury has put forward proposals that would require the UK to meet the Financial Action Tasks Force (FATF) standards with the FCA taking on the role for supervising the new regime.
In essence, this would mean that the FCA would introduce AML supervision for businesses that enable cryptoassets exchanges and act as custodians for ‘wallets’ that store cryptoassets for customers.
Dependent upon the outcome of the consultation, it may also include businesses enabling exchange of on cryptoassets for another and cryptoassets ATMs in addition to, potentially, those facilitating peer—to-peer exchange of cryptoassets or to those providing ‘wallets’ without providing custody of those ‘wallets’.
In considering the proposals, the regulator would need to bear in mind the resourcing implications, risks and issues associated with taking on these new supervisory responsibilities and whether communication alone was sufficient for managing risks not covered by the regime (such as technology and resilience requirements, financial promotions and consumer protections) or whether further rules might be required.
It has been left that the FCA has agreed in principle to act as AML supervisor for the specified cryptoassets businesses within the UK and that they will continue to engage with the industry pending the outcome of HM Treasury’s consultation so that it may inform the design and assist the timely implementation of the new regime.
For now we will have to await the response to HM Treasury’s consultation before anything further is finalised.
To read the FCA’s published board minutes, click here.
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