Policymaking in the United Kingdom is typically reactionary, and this is no less true in the context of the crypto-asset industry. Reactionary policymaking means that the U.K.’s crypto regime is occasionally behind those of its competitors, which could ultimately cause the U.K. to become a less attractive place to conduct crypto-related business.
The former Chair of CryptoUK, Iqbal Gandham, pointed out in an April 2018 letter to the U.K. Parliament’s Treasury Committee that despite the fact that “the UK holds great potential to become a global leader in cryptocurrencies,” the “absence of regulatory direction” has stifled innovation in the industry.
Indeed, it was only last year that the Financial Conduct Authority published its final “Guidance on Cryptoassets” paper, and only this year did it announce that existing businesses carrying out crypto-related activity in the U.K. must register with the FCA and any new crypto businesses established after that date will not be able to operate unless they have successfully registered.
The new registration requirements were implemented following recent amendments to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, otherwise known as the MLRs. The explanatory note to the MLRs indicates that the purpose of the statutory instrument is to carry out the implementation of the European Commission’s Anti-Money Laundering Directive, or AMLD, which sets out to:
“Promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.”
Implementation of the new amendments saw the appointment of the FCA as the official regulatory body overseeing crypto-asset activity, giving it the responsibility of carrying out the purpose of the MLRs.
The obligation to register with the FCA does seem like a positive step toward providing more regulatory clarity in the U.K., but what happens beyond registration? And what can we learn from other jurisdictions?