UK Recognizes Cryptocurrency Trading as Regulated Financial Activities | Internet law

The said law represents a legislative milestone for the jurisdiction of the United Kingdom, as it introduces many important reforms for the financial sector such as operations with cryptocurrencies, the main novelty being their recognition as regulated activities.

Through this regulation, the United Kingdom seeks to create a legal framework that guarantees security and certainty for those who work in cryptocurrencies, in addition to opening up investment opportunities and promoting the country’s economic growth.

definition of Settlement assets (Digital Settlement Assets)

LSMF first introduces a definition Digital settlement assets [LG1] (A digital settlement asset), as a digital representation of value or rights, whether or not cryptographically protected, that can be used to settle payment obligations, or be transferred, stored or traded electronically.

Financial promotion: protection for users of crypto assets

Financial promotion is defined as communication aimed at inviting or urging a person to participate in an investment activity, which in turn includes a wide range of activities controlled by the so-called Financial Conduct Authority (Financial Supervision Authority) Such as: accepting deposits, managing investments, or insurance contracts.

According to current regulations, this type of promotion can only be carried out by persons or companies authorized by the Financial Conduct Authority (FCA).

With regulations preceding LSMF approval, due to the fact that cryptocurrencies operate in a largely unregulated environment, companies and individuals can promote cryptocurrency investment campaigns, without being subject to the same controls and regulations as others. Financial Supervision Authority.

As mentioned before, since the LSMF recognizes cryptocurrency activities as regulated operations, such promotional campaigns will be subject to FCA standards.

For example, it will no longer be possible to run campaigns where a cryptocurrency investor gets rewarded for referring another user until they make the same investment.

Additionally, starting October 8, 2023, first-time cryptocurrency investors must wait for a 24-hour cooling-off period before completing their transactions.