The UK Financial Conduct Authority (FCA) recently called on cryptocurrency firms to submit their applications by June 30th, detailing how they will comply with new anti-money laundering (AML) requirements.
Key Deadlines and Registration Process
- Application Deadline: June 30th allows FCA sufficient time to review submissions and enforce compliance.
- Registration Mandate: Firms operating before January 10, 2021, must register or cease operations. New businesses post-deadline require pre-approval.
- Required Documentation: Companies must provide entity details, business objectives, AML frameworks, and risk assessment methodologies.
Regulatory Background
Since January 2020, the FCA has supervised crypto businesses under:
- 5AMLD (EU’s 5th Anti-Money Laundering Directive)
- Revised MLR 2017 (Money Laundering Regulations)
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UK’s Cryptocurrency Classification
FCA’s 2019 Guidance on Cryptoassets categorizes digital assets into three types:
| Token Type | Definition | Regulatory Status |
|---|---|---|
| Exchange Tokens | Medium of exchange (e.g., Bitcoin, Ethereum) | AML/CTF compliance only |
| Security Tokens | Investment instruments resembling stocks/bonds | Fully regulated |
| Utility Tokens | Grants product access without equity | Unregulated |
Taxation Policies
HMRC’s 2019 guidelines clarify:
- Cryptocurrencies are taxable assets, not currency.
Exempt from stamp duties but subject to:
- Capital gains tax
- Income tax on mining/trading
- National Insurance contributions
Central Bank Digital Currency (CBDC)
The Bank of England’s March 2020 report explores CBDC designs, noting:
- DLT-based systems aren’t mandatory.
- Centralized models remain viable for implementation.
FAQs
Why must crypto firms register by June 30?
To ensure FCA can process applications before the January 2021 compliance deadline.
Are Bitcoin transactions illegal in the UK?
No, but exchanges must follow AML/CTF rules.
How are security tokens regulated?
As "specified investments" under MiFID II, requiring full FCA authorization.
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What taxes apply to crypto mining?
Income tax on mined tokens and NICs if operating as a business.