The UK HM Treasury (HMT) has published a consultation on the UK regulatory approach to crypto-assets and stablecoins. In addition to the consultation, the document includes a call for evidence on investment and wholesale uses of crypto-assets, and the broader use of DLT in financial markets. The deadline for the consultation is 21 March 2021.
The consultative paper sets out the definitions of Crypto-assets, E-money tokens and Security tokens. As for the Security token, these are described as tokenised, digital forms of traditional securities and are – as emoney tokens – already within the UK’s regulatory perimeter and therefore subject to FCA regulation.
According to the paper, unregulated tokens are neither e-money tokens nor security tokens and include:
– utility tokens: tokens used to buy a service, or access a DLT platform – e.g., access to online cloud storage; and
– exchange tokens: tokens that are primarily used as a means of exchange – e.g., Bitcoin, Ether and XRP.
As regards stablecoins, the paper explains that depending on design, they can fall into any of the categories set out above.