Treasury responds to feedback on future regulatory regime for cryptoassets
Nov 28, 2023 2:43:12 PM
Update
Responding to feedback on its recent consultation and call for evidence on the future financial services regulatory regime for cryptoassets, HM Treasury says it has considered submissions carefully and set out modifications to its original proposals, as well as outlining further actions designed to provide greater clarity on key areas of interest. The main points are as follows:
- The Treasury has published (separately) a Stablecoins Update providing detail on which regulated activities and tokens will be in scope for Phase 1 and how these will be demarcated from Phase 2 activities and tokens
- Chapter 2 of the Treasury’s response provides some reassurance on intended outcomes for NFTs, utility tokens, security tokens, and other data objects - which some respondents worried might be unintentionally captured. Cryptoassets relating to investments that are already regulated (e.g. security tokens) will not be captured. Nor will truly unique or non-fungible NFTs, which are more akin to digital collectibles or artworks than financial services as generally understood
- Chapter 3 includes updates on timelines for Phase 2 legislation and further information on the future FCA authorisation process for cryptoasset activities
- Chapter 4 accepts the need to mitigate any fragmentation of cryptoasset liquidity resulting from a restrictive location and market access policy, espousing an approach that facilitates access to international liquidity pools under specific circumstances
- Chapter 5 notes that the recklessness and negligence liability standards will enable market participants to manage their liability - provided they make reasonable enquiries - and that publicly available information may be used to compile appropriate parts of disclosure/admission documents
- Chapter 9 sets out a modified approach to market abuse obligations on cryptoasset exchanges, acknowledging that staggered implementation may be needed for cross-venue data sharing obligations
- Chapter 12 features a clear plan of action on staking to inform the government’s view on a set of critical questions and provide greater regulatory clarity to industry. An engagement programme with external stakeholders is underway to inform this work.