There are many reasons why people choose to live in Britain: it's home to some of Europe's oldest universities and has some beautiful countryside. Besides that, the country also has a very open approach towards digital currencies, making it an ideal place if you're interested in trading or just using them as part of your day-to-day life. This means how cryptocurrencies are regulated is simple and minimal.
The United Kingdom is considered one of the leaders when it comes to blockchain technology. It was recently reported that London is one of the top investors in this field. That’s because the UK is one of the most cryptocurrency friendly countries in the world. While crypto’s legal status as a currency is still unclear, there are no regulations prohibiting its use as an investment or for payment purposes.
However, businesses must be aware of some potential risks when dealing with UK-based customers and clients who wish to pay or receive funds using cryptocurrencies. Click here to find the best cryptocurrency wallets available in the UK.
So, keep the following in mind:
While no specific cryptocurrencies are regulated, cryptocurrency businesses must comply with other laws. These laws include:
The FCA is the financial regulator of England and Wales. It's responsible for ensuring that consumers have protection when it comes to their finances and banking. Thus, all businesses in the UK must comply with regulations around how they do business. Because cryptocurrencies are an emerging asset class, they fall under the jurisdiction of the FCA.
Cryptocurrency exchanges operating in the United Kingdom must register with this body if they wish to continue operating in this country. This means that you'll need to ensure your exchange is compliant if you offer cryptocurrency trading services to UK residents or businesses!
The first step towards compliance is obtaining a Payment Services Registration Number (PSRN). Obtain this by submitting an application form along with proof of identity documents. You can submit directly through HMRC's Bank Account Opening Service website.
If your business is providing cryptocurrency exchange services, you must have effective systems and controls in place to identify, manage and mitigate the risk of money laundering. You’ll also need to check that your customers are not involved in terrorist financing or any other illegal activity before you open an account for them or provide them with a service.
The FCA has published the Guiding Principles on Regulation for Crypto Assets. They have also distributed ledger technology (DLT) which aims to address some of the regulatory risks associated with crypto assets and DLT. It is not a law. But, is a useful guide for businesses that want to apply for FCA authorization or are regulated by other regulators.
The guidance is not mandatory, but it provides that it would be "inappropriate" if firms did not follow the guidance when carrying out activities related to crypto assets and DLT. Although this may vary depending on what kind of business you are operating. Especially, if your activities are subject to regulation by another regulator.
Before issuing an ICO, businesses should seek legal advice. They should look at whether their ICOs will involve issuing financial instruments under the EU's Markets in Financial Instruments Directive (MiFID II). Or, if it constitutes having a prospectus approved by the FCA.
What is an initial coin offering? An initial coin offering (ICO) is a way for companies to raise capital by selling cryptocurrency tokens or coins. This process involves creating a digital token on blockchain technology. This is tradable and usable on the platform that it is for.
For example, if you wanted to use an app called 'Foodie' and you had some Foodie Tokens that could be redeemed for food at restaurants participating in Foodie’s network, then you would need Foodie Tokens in order to use this app.
As you can see, the UK is a great place to do business. It has a history of innovation and entrepreneurship that extends back centuries. It continues to be one of the most forward-thinking countries in the world.
However, as with any new industry there are some legal cryptocurrency regulation complexities that need navigation by anyone who wants to set up shop there.