Stephen WilsonThe FCA is consulting on draft perimeter guidance aimed at helping firms understand what crypto-related activities will fall within the UK regulatory perimeter from October 2027. The guidance sets out how the FCA interprets:
- issuing qualifying stablecoins in the UK;
- operating a cryptoasset trading platform;
- dealing as principal or agent and arranging deals in qualifying cryptoassets;
- safeguarding and arranging safeguarding of qualifying cryptoassets and relevant specified investment cryptoassets; and
- staking (in the context of the new regulated activity of arranging qualifying cryptoasset staking).
The FCA notes that some terminology is used differently within the crypto-markets and in a way that does not necessarily map neatly across to financial regulatory concepts, so that it might not always be clear from the name of an activity whether it is inside or outside the perimeter. It stresses that what is important is the substance of the activity and what is being done by any particular person – and this includes where a service includes some form of decentralised feature.
There will be a new Chapter 19 of PERG, but the fundamental concepts of what is “by way of business” and what “in the UK” means will equally apply to crypto activities, and the FCA proposes changes to other chapters of PERG in this respect. The guidance explains what the FCA understands each activity to comprise and also gives guidance on cryptoasset lending and borrowing, although this is not one of the newly regulated activities as such, but which may in fact amount to a deal, rather than a loan.
There is also guidance on the interplay between the new regulated activities and the MLRs, and an explanation that if a firm determines that it does not need authorisation it should carry out a separate analysis on whether it would still need MLR registration.
The FCA seeks views by 3 June. As a reminder, firms can start applying for authorisation from September this year.