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UK FCA Probes Crypto Businesses

The Financial Conduct Authority (FCA), the UK financial regulator, confirmed to the Financial Times on 30 December 2018 that it was investigating 18 businesses involved in the sale of cryptocurrencies. The regulator has also issued alerts and warnings about dozens of companies suspected of cryptocurrency investment fraud. Currently, the transfer, purchase and sale of cryptocurrencies are not regulated in the UK. However, companies that sell regulated investments with an underlying cryptocurrency element may need FCA authorisation to do so depending on their activities.

As of 12 November 2018, the FCA had opened inquiries into 67 companies involved in the cryptocurrency business; information obtained by a newspaper through a Freedom Of Information request. Of the 49 inquiries that were subsequently closed, the FCA had issued consumer alerts for 39 firms. Alerts are issued by the regulator when it is concerned a company is operating without authorisation, and is a suspected fraud. Ten of the 49 inquiries were closed because the company had been warned they may need authorisation to continue their activities, or because there was not enough evidence for the FCA to take matters further.

In late 2018 the FCA said it was considering a ban on the sale of derivatives based on cryptocurrencies such as bitcoin. If it happens, this will be the regulator’s first major intervention in the market. The FCA is also launching a consultation early in 2019 on whether and how to regulate cryptocurrencies, as well as the trading infrastructure that supports them, including crypto exchanges and digital wallet providers.

Copyright 2020 K & L GatesNational Law Review, Volume IX, Number 8


About this Author

Jonathan Lawrence, KL Gates Law Firm, Restructuring and Insolvency Attorney

Jonathan Lawrence has been a finance partner in the London office since 2005.

Alongside his general banking and finance work, he concentrates his practice on restructuring & insolvency matters -- Legal 500 UK 2016 Corporate restructuring and insolvency “K&L Gates LLP … maintains a ‘quality team’ that includes ‘impressive’ team head Jonathan Lawrence”.

Mr. Lawrence also plays a leadership role in the firm’s global Islamic Finance practice -- Legal 500 UK 2016 Islamic Finance “K&L Gates LLP is...