Cryptoassets—essentials
Produced in partnership with James Burnie, Partner at Gunnercooke

The following Financial Services practice note produced in partnership with James Burnie, Partner at Gunnercooke provides comprehensive and up to date legal information covering:

  • Cryptoassets—essentials
  • What are cryptoassets?
  • Common terms associated with cryptoassets
  • Development of cryptoassets
  • Characteristics of cryptoassets
  • Cryptoassets as property
  • Location of cryptoassets
  • Considerations for businesses looking at cryptoasset technology
  • Cryptoassets, the smart contract and ICOs
  • Disputes involving cryptoassets
  • More...

Cryptoassets—essentials

What are cryptoassets?

In this Practice Note, the term ‘cryptoasset’ is used as described in the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, SI 2017/692 (MLRs 2017) (as amended by the Money Laundering and Terrorist Financing (Amendment) Regulations 2019, SI 2019/1511 (MLRs 2019)), as meaning:

‘a cryptographically secured digital representation of value or contractual rights that uses a form of distributed ledger technology (DLT) and can be transferred, stored or traded electronically’

This definition is derived from the description of cryptoassets provided by the UK Cryptoassets Taskforce in its final report and reiterated by the Financial Conduct Authority (FCA) in consulttion paper CP19/3: Guidance on cryptoassets. This has broadly become ‘the’ definition for UK regulatory purposes for the moment (given that the key regime where the definition matters is the anti-money laundering (AML) regime). It is also how the FCA defines cryptoassets on its cryptoassets webpage.

We specifically use the term ‘cryptoasset’ in this Practice Note rather than ‘digital asset’ (as this is broader and may include any digital representation of an asset, such as uncertificated shares), ‘virtual currency’ or ‘cryptocurrency’ (on the basis that this generally is used to described exchange tokens in certain circumstances (as described below) only).

One of the hurdles in relation to understanding cryptoassets lies in the inconsistent use of language by regulators and market participants,

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