UK Cryptoassets taskforce publishes final report

Earlier this week, the UK’s Cryptoassets Taskforce (consisting of HM Treasury, the Financial Conduct Authority (the “FCA”) and the Bank of England) (the “Taskforce”) published its final report, providing an overview of cryptoassets and underlying technology as well as an assessment of the risks and benefits of such assets and the path forward for UK regulation (the “Report”).

Whilst the overarching message is that the three members of the Taskforce continue to support the development of distributed ledger technology, the Report also goes into the current treatment of types of cryptoassets and sets out guidance for the consultations that are upcoming.

UPCOMING CONSULTATIONS AND PUBLICATIONS

Chapter 5 of the Report sets out a table on the next steps which the members of the Taskforce plan to take. For example:

By the end of 2018:

  • the FCA aims to consult on perimeter guidance on security tokens which will clarify the current regulatory position in relation to security tokens; and
  • the FCA also aims to consult on a potential prohibition of the sale to retail consumers of all derivatives referencing exchange tokens (e.g. bitcoin).

Early 2019:

  • the UK government intends to issue a consultation in early 2019 to explore whether (and how) exchange tokens and related firms (such as exchanges and wallet providers) could be regulated effectively. The Report specifically refers to a coordinated international approach being essential, which will be a new approach to take as Bitcoin exchanges have not been subject to regulation to date;
  • the UK government plans to issue a consultation in early 2019 to explore initial coin offerings, where tokens are issued that have comparable features to specified investments. Critically, the UK government “stands ready to redefine and expand the perimeter if required“;
  • the fifth Anti-Money Laundering Directive provisions on cryptoassets will be implemented in 2019 and the UK government intends to go beyond this directive, and will consult in early 2019 on applying anti-money laundering requirements to other persons involved in the crypto business; and
  • although tax is outside the Taskforce’s remit, there is a note that HM Treasury is working closely with HMRC and that HMRC will further update their guidance on the tax treatment of cryptoassets by early 2019.

NEXT STEPS

To view the Report, please click here.

For more information on cryptoassets, Cleveland & Co external in-house counsel, your specialist outsourced legal team are here to help.

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