Although UK financial regulators have issued warnings in relation to investment in cryptoassets,4 they are not subject to a blanket prohibition or ban in the UK. However, as indicated by the definitions set out in the Taskforce Report, some will be subject to financial regulation (see Cryptocurrency regulation below). The UK anti-money laundering (“AML”) regime has also been extended to capture activities relating to most cryptoassets (including cryptocurrencies), regardless of whether they are otherwise subject to financial regulation (see Money transmission laws and anti-money laundering requirements below).
Despite publication of the Taskforce Report, UK policy towards cryptocurrencies is still developing. In particular, the authorities making up the Taskforce are continuing to conduct further substantive work in relation to cryptocurrencies. For example, the UK Financial Conduct Authority (“FCA”) consulted on and published regulatory guidance in relation to cryptoassets (including cryptocurrencies) (the “FCA Guidance”). It has also recently consulted on a proposed ban on the sale, marketing and distribution of derivatives and exchange-traded notes referencing cryptoassets (including cryptocurrencies) to all retail consumers. The FCA had expected to implement rules relating to the retail ban in Q2 of 2020; however, owing to COVID-19, it delayed the implementation to the second half of 2020. At the time of writing, HM Treasury is also consulting on changes to the UK financial promotions regime with a view to bringing otherwise unregulated cryptoassets (including cryptocurrencies) into scope (see Sales regulation below).
Cryptoassets (including cryptocurrencies) are not considered money or equivalent to fiat currency in the UK. For the time being, the Bank of England has not made a decision on whether to introduce a central bank digital currency, and has launched a discussion paper on what such a central bank digital currency would look like.