This is the newly designated plan of the FCA - the main market regulator of the country. The ministry published a document dividing crypto tokens into three categories: “exchange” tokens, security - securities, and utility - electronic money, including stablecoins.
The regulator considered the possibility of applying to them the existing rules that apply to investments, financial instruments and electronic money, respectively, adjusted for "crypto". Thus, according to the Office, cryptocurrency carries risks for consumers and investors. Their clear classification will help companies in this industry to conduct their business within the legal field, and consumers - to know what protection they can expect.
FCA has identified three categories of tokens:
"Exchange tokens", which include, for example, Bitcoin and Litecoin. These assets are not to be classified as investments, as they are not a recognized means of payment in the UK. They are also more often volatile than other investment instruments. The regulator does not intend to regulate their exchange.
Security tokens, in turn, fall under the definition of investment in the context of the 2000 Law on Financial Services and Markets and the second EU directive On Financial Instruments Markets. Security tokens should be subject to all the requirements that apply to traditional securities, and start-ups issuing them should apply to the regulator for approval.
"Utility tokens" under certain conditions can be recognized as electronic money, but, as a rule, should not be regulated by FCA. They have no characteristics for this that would allow them to be recognized as securities. At the same time, stablecoins satisfies the criterion of electronic money if they are “provided with certain assets, a basket of crypto assets or algorithms that regulate the token supply”.
The next step for the approval of the new legal framework will be the collection of public comments on the proposed measures. It will last until April 5th.