The Financial Conduct Authority (FCA), the regulatory body of the UK, declared on April 6 that the products derived from cryptocurrencies might be regulated in the country as a part of the market for financial instruments II.
As a consequence of this declaration, the businesses that carry out activities with such derivatives should abide by the rules of the FCA Manual and the regulatory provisions of the European Union which are applicable to this sort of market.
This explains the statement of the FCA, that by virtue of which a previous declaration determined that cryptocurrencies aren’t subject to regulation “as long as they do not form part of other regulated products or services”; although, as soon as they’re integrated into other regulated services or products, they have to be governed by the regulations in force for such instruments.
On this approach, since many of the activities carried out with cryptocurrencies generate derivative products, that are then converted into financial instruments, the latter can be included under the Financial Instruments Market Directive II (MIFID II).
Among the many financial instruments derived from cryptocurrency that might be regulated, including futures contracts with cryptocurrencies, contracts for difference (CDF) of cryptocurrency and cryptocurrency options.
In response to the regulator, it’s more likely that many negotiations, transactions and advisory activities or provision of services are constituted in regulated activities that require authorization from the FCA, as they’re derived from cryptocurrencies or tokens issued through an Initial Coin Offering (ICO).
It is suggested, due to this fact, that companies make sure they have got the authorization and the pertinent permission to carry out any of those regulated activities. It additionally warns that acting without that authorization might be considered a criminal offense, so if any authorized company offers these products without the corresponding permission can be subject to penalties.
Like many regulatory bodies in a number of countries, the UK analyzes the rules and laws in force within its legal framework, so as to have the ability to insert within them many of the agreements and transactions which are made with cryptocurrency currently. In fact, authorities in countries like the United States have acknowledged that cryptocurrencies don’t represent a threat to their economy.
Join the newsletter to receive the latest updates in your inbox.