UK government confirms regulatory regime for cryptoassets

On 30 October 2023, HM Treasury published a response to its February 2023 consultation paper on the future financial services regulatory regime for cryptoassets. The government has decided to expand the list of ‘specified investments’ in the Regulated Activities Order so that firms undertaking relevant activities relating to cryptoassets will be required to be authorised by the FCA.

The activities are broadly as proposed in February: issuance activities; exchange activities; investment and risk management activities; lending, borrowing and leverage activities; and custody activities.

In its response, the government said that firms registered with the FCA under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs) will not be automatically grandfathered into the new authorisation regime as such firms will need to be assessed against a broader range of measures than the set of measures which apply to firms registered under the MLRs. The FCA will provide more details on the assessment it will undertake in due course.

The government expects to lay secondary legislation in 2024 subject to Parliamentary time.