Reading between the lines of the UK Crypto-assets task force report
The long-awaited UK Cryptoassets Taskforce Report was published on 30 October 2018, following shortly after the Parliamentary Treasury Committee’s report in September. The report recognised that there is currently a lack of clarity for market participants and confirmed a number of consultations are scheduled for the end of 2018 and 2019. Although the report appears to be more positively framed than the Treasury Committee report, at this stage we still don’t know what approach the Taskforce members (HM Treasury, the FCA and the Bank of England) will adopt towards regulation of crypto assets in the UK.
The consultations are expected to cover the key areas of risk identified by the Taskforce, including around use of crypto assets for illicit activities, providing guidance around which crypto assets fall within the current regulatory perimeter, assessing whether any extension of the regulatory perimeter is necessary and whether and how to regulate effectively exchanges and wallet providers. In addition, by the end of 2018 the Taskforce are going to consider a potential prohibition on sales of derivatives referencing crypto assets to retail consumers.
All of this sounds very sensible and it does not come as a great surprise that these are areas on which the Taskforce would like to focus. However, the Taskforce did not give anything away in terms of what the consultations might propose or how they envisage the future regulatory landscape for crypto assets. It took a different approach to the Treasury Committee as it categorised different types of tokens (exchange, security and utility) and did not suggest that all tokens should be regulated in the same way. However, it also did not provide any indication of how the Taskforce believes tokens currently falling outside the regulatory perimeter should be regulated. ICO issuers will therefore need to wait to see the content of the consultations before they start any celebrations.
Overall, the report gives us some cautious optimism that that the UK regulators intend to adopt a thoughtful approach to any new regulation, ensuring adequate protection of consumers while also supporting the continued development of DLT and the crypto asset industry in the UK.