Since 10 January 2020, cryptoasset firms have been required to build and maintain anti-money laundering (AML) and counter terrorist financing (CTF) frameworks to comply with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. Furthermore, all existing cryptoasset firms are required to register with the Financial Conduct Authority (FCA) by 30 June 2020 and all new firms cannot conduct business until registration is confirmed.
Background to the regulation
Cryptocurrencies, as with other speculative assets, are vulnerable to financial crime and have therefore been brought under the scope of regulation to protect consumers and the wider market in the UK. The new regulatory guidelines mean that appropriate steps should be taken to mitigate risks, proportionate to the size and nature of business activities.
Who is in scope?
The legislation broadly categorises cryptoasset firms into two categories – cryptoasset exchange providers and custodian wallet providers. The definitions are drafted sufficiently widely to bring in scope all firms and sole traders that are providing services for profit.