The United Kingdom’s Financial Conduct Authority (FCA) will be publishing a review of cryptocurrencies this year in conjunction with the Treasury of the UK and the Bank of England (BoE), according to the FCA’s business plan for 2018/2019.
At the end of March, the Treasury of the UK had announced the creation of a cryptocurrency task force with the BoE and the FCA to look into how to both regulate and support crypto technologies. The FCA had also reported the release of a global fintech regulatory sandbox for testing fintech innovation without needing to wait for regulatory approval.
Under a section entitled “Cross-sector priorities,” the FCA details in their business plan how they plan to approach the speed with which fintech innovation is driving change in markets:
“Our approach is to sustain a regulatory environment where consumers and firms can maximise the opportunities of competition, innovation and big data while reducing or mitigating the associated harms.”
Cryptocurrencies are listed among the “key activities” of the FCA Innovate program, the FCA’s way of assisting firms with the regulatory guidelines in exchange for keeping up with new market trends like “initial coin offerings and distributed ledger technology.”
The FCA report reads that although cryptocurrencies “are not currently within our regulatory perimeter […] some models of use or packaging cryptocurrencies bring them within our perimeter, making the landscape complex.” The FCA also notes that they have already released guidelines for dealing with cryptocurrency derivatives, including futures, contracts for differences (CFD), and options.
The FCA will continue to monitor the “number of new entrants to the market and the emergence of new innovative products to meet consumer needs” as a way to see if fintech is helping “improve competition in the interest of customers.”
The question of how to regulate cryptocurrencies across the European Union has varied options put forward, with the BoE governor suggesting in March that the crypto ecosystem should be held to the same standards as the traditional financial system.
The chairperson of the European Banking Authority has said that prohibiting banks and financial institutions from holding and selling crypto may be easier than direct regulation of cryptocurrencies, while a draft of a G20 documents reads that the group may consider crypto as an asset rather than a currency.