Tag: UK

1
UK’s Increased Regulatory Interest in Cryptoassets
2
Do Consumers Really Need More Financial Protections? The UK Government Says Yes!
3
AML Scrutiny in the UK: The Trend Towards Culture of Compliance
4
UK Payments Landscape Review
5
It’s Happening in the UK: UK Treasury to Regulate Stablecoins
6
Brexit: Payment Regulations on a Temporary Standstill
7
Cryptoassets: Taxation of Individuals in the UK
8
UK’s Green FinTech Challenge
9
UK Cryptoassets Taskforce Final Report
10
Regulating the UK “Wild West” of Crypto-Assets

UK’s Increased Regulatory Interest in Cryptoassets

By Judith Rinearson and Kai Zhang

On 24 March 2022, the Bank of England (in the name of its Financial Policy Committee) published a paper on the potential risks of cryptoassets to UK financial stability. While the risks are currently considered to be limited given the small size of the cryptoassets and associated markets relative to the global financial system, the FPC notes that the rapid growth of the crypto sector and potential for interconnections with the wider financial system mean that they will present financial stability risks in the future.

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Do Consumers Really Need More Financial Protections? The UK Government Says Yes!

By Judith Rinearson and Kai Zhang

In May 2021, the UK‘s Financial conduct authority (FCA) published a consultation paper proposing there would be a “new consumer duty“.[1]  The central proposition is that a firm must deliver “good outcomes” for consumers which is then supplemented by additional requirements. 

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AML Scrutiny in the UK: The Trend Towards Culture of Compliance

By Kai Zhang

On 14 December 2021, National Westminster Bank Plc (“NatWest“), a major bank in the UK, was fined by the Financial Conduct Authority (“FCA“) close to £265 million for failure to comply with the relevant anti-money laundering (“AML“) requirements with respect to one single client, a Yorkshire jewelry company (“the Client”) during the period from 8 November 2012 to 23 June 2016 (the “relevant period“). The fine would have been nearly £398 million, but NatWest pleaded guilty and therefore was given a reduction. In addition, slightly over £460,000 of crime money was confiscated (which is essentially the fees NatWest gained from the Client.).

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UK Payments Landscape Review

By Kai Zhang

In July 2020, HM Treasury published a “Payments Landscape Review: Call for Evidence” for a strategic review of the UK payments sector. Following feedback from the industry, HM Treasury published its Response to the Call for Evidence in October 2021 which sets out a number of initiatives to ensure the payment sector stays at the “forefront” of technology and innovation.

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It’s Happening in the UK: UK Treasury to Regulate Stablecoins

By Kai Zhang and Judie Rinearson

On 7 January, the UK Treasury published a consultation on its proposed approach to regulating stablecoins. https://www.gov.uk/government/consultations/uk-regulatory-approach-to-cryptoassets-and-stablecoins-consultation-and-call-for-evidence  Although the title of the consultation includes “cryptoassets” – this is the just first stage in the consultative process for cryptoassets, which focuses on stablecoins referred to as “stable tokens”. The consultation closes on 21 March. For US readers, a “consultation” is the start of regulatory process, not unlike an “Advance Notice of Proposed Rulemaking” or “ANPR” in the US.  The UK government sets out the supervisory perimeters, seeking input from the public, and leaving the detailed requirements to be designed by the regulators. Accordingly, the consultation discusses only general principles and the overall framework.

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Brexit: Payment Regulations on a Temporary Standstill

By Kai Zhang, Special Counsel, London

Changes are coming to the UK payment services regulatory landscape post-Brexit (from 1 January 2021). However, certain Brexit-triggered changes have been put by the FCA on “standstill”, which lasts until 31 March 2022; i.e. during this standstill period, firms can effectively ignore the relevant changes and continue to comply with the current requirements.

We summarise here how the standstill applies to some of the key legislation. Note that this does not cover the changes themselves that have been made due to Brexit.

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Cryptoassets: Taxation of Individuals in the UK

By Jonathan Lawrence

On 19 December 2018, the UK tax authority, HM Revenue and Customs (“HMRC”), published a policy paper on the taxation of cryptoassets. The guidance is limited to HMRC’s view in relation to individuals holding cryptoassets and does not extend to tokens or assets held by businesses. The guidance confirms that HMRC does not consider cryptoassets to be currency or money for tax purposes and separates crypto assets into three categories of “tokens”: exchange tokens, utility tokens and security tokens. The guidance focuses on the taxation of “exchange tokens,” a term encompassing assets such as Bitcoin.

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UK’s Green FinTech Challenge

By Jonathan Lawrence

The UK’s Financial Conduct Authority has launched its Green FinTech Challenge. This is aimed at firms developing green financial technology solutions that need specific regulatory support to bring their proposition to market. The Challenge is designed to support innovation and growth in the Green Finance sector as part of the UK government’s Green GB Week which started on 15 October 2018.

Firms that require specific regulatory support are invited to apply. The Challenge will provide support to a selection of firms developing innovative products and services to assist in the UK’s transition to a greener economy. It is open to start-ups, incumbents and technology providers.

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UK Cryptoassets Taskforce Final Report

By Jonathan Lawrence

The UK Cryptoassets Taskforce has recently published its final report.  The Taskforce comprises HM Treasury, the Financial Conduct Authority and the Bank of England and was formed in March 2018.

While the use of cryptoassets for illicit activity remains low in the UK, the Taskforce concludes that these risks are increasing and the use of cryptoassets for money laundering is growing. The UK authorities will bring all relevant firms into anti-money laundering and counter-terrorist financing regulation. This action will go significantly beyond the requirements set out in the European Union Fifth Anti-Money Laundering Directive. The UK government will consult on its proposed actions and will legislate during 2019.

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Regulating the UK “Wild West” of Crypto-Assets

By Jonathan Lawrence

On 19 September, the UK House of Commons Treasury Committee published a highly critical report of the state of UK crypto-asset regulation. Crypto-assets themselves (i.e. those designed primarily as a means of payment / exchange) are not within the scope of UK Financial Conduct Authority (FCA) regulation. This is because crypto-assets generally will not meet the criteria to be considered a specified investment under the Regulated Activities Order (RAO), nor would they typically qualify as ‘funds’ or ‘e-money’ in the Payments Services Directive and the E-Money Regulation 2009.

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