UK regulation of cryptoassets

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • UK regulation of cryptoassets
  • What are cryptoassets?
  • General approach to scrutiny of cryptoassets
  • Why is it difficult to regulate cryptoassets?
  • Treatment of cryptoassets in the UK
  • UK tax and AML developments concerning cryptoassests
  • HMRC tax developments
  • Background to UK approach to treatment of cryptoassets from an AML perspective
  • Treasury Committee inquiry and the formation of the UK Cryptoassets Taskforce
  • Treasury Committee cryptoassets inquiry
  • More...

UK regulation of cryptoassets

This Practice Note focuses on the approach of UK authorities and regulators to the regulation of cryptoassets. It also provides some background to the meaning of cryptoassets and the unique challenges that cryptoassets pose to regulators. For information about the approach taken by supranational bodies and EU authorities and regulators, see Practice Note: Supranational and EU regulation of cryptoassets.

What are cryptoassets?

One of the hurdles in relation to understanding non-traditional currencies and assets lies in the inconsistent use of language. Regulators and tax authorities, as well as commentators, refer variously to cryptoassets, digital currencies, virtual currencies, cryptocurrencies, and crypto tokens, and it is not always clear whether they are using the terms interchangeably or with the specific meaning of each in mind. For more information about how these terms are defined, see Practice Note: cryptoassets—essentials.

In this Practice Note, the term ‘cryptoasset’ is used as described in the European Securities and Markets Authority’s (ESMA) Securities and Markets Stakeholder Group’s (SMSG) October 2018 Own Initiative Report on Initial Coin Offerings and cryptoassets (the SMSG Own Initiative Report) and the Financial Conduct Authority’s (FCA) policy statement PS19/22: Guidance on cryptoassets (PS19/22), which followed on from consultation paper CP19/3: Guidance on cryptoassets (CP19/3). In the SMSG Own Initiative Report, ‘cryptoasset’ is used as generic term for cryptocurrencies, virtual currencies, virtual assets and digital tokens/crypto tokens. In

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