UK to tighten rules on cryptocurrency

By Simon Jessop and Emma Rumney

Britain’s financial watchdog has warned that companies offering services linked to cryptocurrency derivatives must meet all relevant rules in the regulator’s handbook or face sanctions.

The Financial Conduct Authority (FCA) does not currently regulate cryptocurrencies.

But it said that dealing or arranging transactions in, advising on or providing other services related to derivatives referencing cryptocurrencies or tokens issued through an initial coin offering (ICO), would likely require its authorisation.

This includes cryptocurrency futures, cryptocurrency contracts for differences (CFDs) and cryptocurrency options, it said. The FCA warned consumers last September that ICOs were high risk and speculative.

Europe’s top markets watchdog warned in November crypto coins could turn out to be worthless.

Demand for cryptocurrencies pushed up prices for currencies such as Bitcoin to a record high of over $19,000 (€15,476) in 2017, before concerns that regulators may step in sent markets tumbling.

In March, financial policymakers from the world’s 20 leading economies called on national regulators to monitor the development of crypto-assets and their risks, but stopped short of co-ordinated action due to a lack of consensus.

The FCA’s move follows an announcement last month by UK finance minister Philip Hammond, who said Britain would set up a task force both to manage the risk around cryptoassets and exploit the underlying blockchain technology.

The FCA said: “It is firms’ responsibility to ensure they have the appropriate authorisation and permission to carry on regulated activity.”

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