The Financial Conduct Authority on Wednesday released guidelines for the Finance Ministry in the UK on how to regulate cryptocurrencies. Reportedly, the Ministry welcomed the guidance and was planning to consult on ‘unregulated cryptocurrencies’ later this year.
This was a monumental event in the UK’s Financial System as they attempted at a classification of different types of cryptocurrencies – ‘Token Taxonomy.’ The Authorities broadly viewed three kinds of crypto-assets: cryptocurrencies as a medium of Exchange, utility tokens and security tokens.
Stablecoins and Security Tokens to Be Formalized Soon?
They recognized ‘stablecoins’ backed by FIAT, as crypto which could be regulated as e-money. The guidelines added,
Respondents agreed that certain types of tokens can meet the definition of e-money and so fall under the EMRs
Nevertheless, these are some types of stablecoins like ones backed by a commodity or a basket of currencies and commodities. While Facebook’s Libra wasn’t mentioned explicitly, it was indicated that depending on the assets and the ecosystem that Libra builds it could be regulated as a security, a debt instrument, or other types of specified investments.
‘Security tokens‘ issued on the blockchain were to broadly accepted to be regulated under RAO (Regulated Activities Order).
Unregulated Exchange and Utility Tokens
The FCA broadly accepted that cryptocurrencies that are not issued or controlled by a central authority would be classified under ‘unregulated cryptocurrencies’ as they do not fall under the purview of existing laws. These include Exchange currencies like Bitcoin and even utility tokens like Ethereum.
Last but not least, ‘utility tokens’ were defined as cryptocurrencies “that do not grant holders rights that are the same as those granted by specified investments.” While some them might be classified as e-money, the FCA largely agreed on putting utility tokens in the unregulated section.
Moreover, the FCA also raised concerns around the dubious activities conducted on Exchange or trade platforms. The FCA told the media,
“A combination of market immaturity, volatility, and a lack of credible information or oversight raises concerns about market integrity, manipulation and insider dealing within crypto-asset markets,”
Regulatory Watchdogs all across the world are starting to consider cryptocurrencies as a serious issue. While the current market capitalization is considerably low, the retail business is quickly adopting this technology.
Furthermore, even US lawmakers noted in the Senate Hearing held the day before that, US Cannot Ban Crypto Even If They Decide To. The finalized laws and guidelines on them can be expected from both Governments within the next year.
Do you agree with the classifications drawn by the FCA? Please share your views with us.
- After Coinbase This Crypto Lender is Facing Regulatory Scrutiny in 3 US States
- XRP Lawsuit: Here’s Why Experts Think Ripple Could Win the Case Against SEC
- Kyrgyzstan Authorities Reveal over 500 Illegal Crypto Mining Farms
- Chinese Exchange Giant to halt expansion amid Crypto Crackdown in South Korea
- Breaking: Binance Reportedly Under CFTC Investigation For Insider Trading
- Solana, Ethereum Price Analysis: September 20, 2021
- Bitcoin Price Prediction: BTC Plummets To $45,000 As Liquidations Soar To $312 Million In An Hour
- Bitcoin’s Performance in the Past Decade Was Impressive, But What About the Next 10 Years?
- Weekly Market Roundup: A Look into the Altcoins that Saw the Biggest Gains?
- DOT Price Analysis: Polkadot Rides Ascending Channel Near All Time High, Will Bulls Break $40?