Published: 23rd December 2019

From 10 January 2020, the FCA will be the anti-money laundering and counter terrorist financing supervisor of UK cryptoasset businesses under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the payer) Regulations 2017 (“MLR”).

All UK cryptoasset businesses carrying on activities in scope of the MLRs will need to register with the FCA 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.

Whilst HM Treasury has not yet published its response to the consultation on the Fifth Money Laundering Directive, the cryptoasset activities consulted on in April 2019 are listed below and cryptoasset businesses carrying out the activities listed below should assume they must comply with the MLRs from 10 January 2020. However, HMT may decide to reduce or extend the range of activities the FCA oversees.

  • Crypto-asset exchange provider
  • Crypto-asset Automated Teller Machine (ATM)
  • Custodian Wallet Providers
  • Peer to Peer Providers
  • Issuers of new crypto-assets, e.g. Initial Coin Offering (ICO) or Initial Exchange Offering (IEO)
  • Publication of open-source software e.g. Non-Custodian Wallet
    providers

The FCA’s responsibility under this regime will be limited to AML/CTF registration supervision and enforcement only. Registration under the MLR 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 FCA guidance, where the FCA has set out its position on the types of cryptoassets which will fall within the 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.

There are different dates to be aware of when registering your business with the FCA:

  • 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. The FCA is encouraging businesses to apply well in advance of this deadline.

https://www.fca.org.uk/firms/financial-crime/cryptoassets-aml-ctf-regime

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