The United Kingdom’s Financial Conduct Authority has announced today that it does not believe crypto assets, such as bitcoin, have “intrinsic value”, essentially considering them without value. It said that consumers should be aware the market is risky and that the assets are unregulated meaning they’re not covered by the Financial Services Compensation Scheme which pays compensation when a financial service is unable to.
In its guidance document, the FCA includes exchange tokens, which includes cryptocurrencies, in the unregulated tokens chapter. It said:
“[W]e consider these tokens to be outside the regulatory perimeter. This means that market participants like crypto exchanges, which only provide a platform for the trading of exchange tokens (like Bitcoin, for example), are outside our remit.”
The FCA gained feedback about this matter and a third of respondents said that they think there ought to be a regulatory framework in place for exchange tokens to prevent money laundering. In response, the FCA said that its view is only advisory, and ultimately, it’s a matter for legislation and the courts.
While the FCA says it shouldn’t regulate bitcoin and most other cryptocurrencies, it does make mention of stablecoins, those backed by fiat currencies. Facebook’s proposed Libra currency falls into this category but isn’t mentioned by name in the guidance. The FCA said stablecoins could fall under its purview but hasn’t commented on Libra because its details haven’t been finalised.
The move is a big step for the UK and cryptocurrencies. To be clear, the FCA’s publication only offers guidance at this point and as it pointed out, it will be for legislators and the courts to decide on what happens in the future, cryptocurrencies like bitcoin could still one day be regulated in the UK.
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