- All UK cryptoasset businesses carrying on activities in scope of the MLRs will need to register from 10 January 2020. Cryptoasset businesses should ensure that they do not mislead customers as to what protections apply and the status of their FCA registration.
- Registration under the MLRs does not mean that customers will benefit from the protections of the Financial Ombudsman Service or the Financial Services Compensation Scheme (FSCS). As most cryptoassets are not specified investments under the Financial Services and Markets Act 2000 (FSMA), it is unlikely that customers will have access to Financial Ombudsman Service or FSCS.
- Customers and firms may wish to consider the types of cryptoassets which will fall within our regulatory remit and the implications this has on consumer protection.
- Cryptoasset activity which falls in the unregulated space, as defined in the Guidance on Cryptoassets, will not have the same consumer protections.
- Cryptoasset activity involving security tokens, for example, are regulated tokens which will provide the same protections as specified investments set out in the Regulated Activities Order.
- For any customers that consider Financial Ombudsman Service and FSCS protection important, we recommend that you check with the firm as to whether this protection applies to the cryptoasset transaction.
- New cryptoasset businesses that intend to carry on a cryptoasset activity after 10 January 2020, must be registered before they can carry on the activity.
- Existing cryptoasset businesses which were already carrying out cryptoasset activity before 10 January 2020 may continue their business, in compliance with the MLRs, but must register by 10 January 2021 or stop all cryptoasset activity.
On October 25, the Financial Conduct Authority (FCA) published a new webpage setting out important information for UK cryptoasset businesses in the context of anti-money laundering (AML) and counter terrorist financing (CFT). As announced in July 2019, the FCA will be the AML/CFT regulator for certain cryptoasset activities starting January 10, 2020. However, the scope of ‘cryptoasset activities’ is still to be determined by Her Majesty’s Treasury (HMT), whose consultation on the matter closed on June 10. The final report has not yet been published but the activities in the consultation paper included: cryptoasset exchange providers; cryptoasset ATMs; custodian wallet providers; peer to peer providers who facilitate the exchange of fiat currencies and cryptoassets; and issuers of new cryptoassets e.g. ICOs.