FCA statement on cryptocurrency derivatives
Published: 08 May 2018
The Financial Conduct Authority (FCA) has published a statement on cryptocurrency derivatives which confirms that cryptocurrencies are capable of being financial instruments under MiFID2, even though the FCA does not view cryptocurrencies as either currencies or commodities for regulatory purposes under MiFID2. This means that any firms conducting regulated activities in cryptocurrency derivatives must comply with all applicable rules in the FCA’s Handbook and directly applicable EU regulations. It is likely that dealing in, arranging transactions in, advising on or providing other services that amount to regulated activities in relation to derivatives that reference either cryptocurrencies or tokens issued through an initial coin offering (ICO), will require authorisation by the FCA. This includes:
- cryptocurrency futures – a derivative contract in which each party agrees to exchange cryptocurrency at a future date and at a price agreed by both parties
- cryptocurrency contracts for differences (CFDs) – a cash-settled derivative contract in which the parties to the contract seek to secure a profit or avoid a loss by agreeing to exchange the difference in price between the value of the cryptocurrency CFD contract at its outset and at its termination; and
- cryptocurrency options – a contract which grants the beneficiary the right to acquire or dispose of cryptocurrencies.
AIMA is establishing a Digital Assets and Blockchain Circulation Group to enable members to be kept updated on AIMA’s work in the space. If member have any questions or comments on the above, or would like to be added to the DAB Circulation Group, please contact Oliver Robinson.