Asked by: Lord Cromwell (Crossbench - Excepted Hereditary)
Question to the HM Treasury:
To ask Her Majesty's Government, further to the introduction of anti-money laundering regulations for cryptoasset firms, what assessment they have made of the number of firms not yet registered by the FCA; what discussions they have had with the FCA about this; and what steps they are taking to ensure compliance with the regulations.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
As of 24 March 2022, 16 cryptoasset businesses are within the FCA’s Temporary Registration Regime. The FCA have concluded assessment of all firms and are expecting further updates from some of these firms before their temporary registration ends. All firms remaining on the regime are aware of what is required from them to conclude their application.
Treasury officials are in regular contact with their counterparts at the FCA regarding the status of these firms, as well as the anti-money laundering regime for cryptoassets in general. Any decision about whether or not to extend the Temporary Registration Regime beyond 31 March is ultimately a matter for the FCA, exercising their powers under the Money Laundering Regulations.
In addition to existing businesses with temporary registration, the FCA is also assessing the applications of new businesses that wish to enter the market, and has admitted a number of these firms to the full register. The FCA are seeking to process all applications as swiftly as is possible whilst maintaining robust regulatory standards. Both Treasury and the FCA are committed to supporting the growth of the cryptoasset sector in a safe and competitive manner.
Since 10 January 2021, only cryptoasset businesses that have been admitted to either the Temporary Registration Regime or the FCA’s full register are permitted to carry on business in the UK. The FCA have a range of civil and criminal enforcement powers under the Money Laundering Regulations and, as of this month, have over 50 open investigations, including criminal probes, into apparently unauthorised cryptoasset businesses.
Asked by: Lord Cromwell (Crossbench - Excepted Hereditary)
Question to the HM Treasury:
To ask Her Majesty's Government what consideration they have given to granting a further extension of the Financial Conduct Authority deadline for registration of cryptoasset firms if the FCA is unable to meet its deadline of 31 March.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
As of 24 March 2022, 16 cryptoasset businesses are within the FCA’s Temporary Registration Regime. The FCA have concluded assessment of all firms and are expecting further updates from some of these firms before their temporary registration ends. All firms remaining on the regime are aware of what is required from them to conclude their application.
Treasury officials are in regular contact with their counterparts at the FCA regarding the status of these firms, as well as the anti-money laundering regime for cryptoassets in general. Any decision about whether or not to extend the Temporary Registration Regime beyond 31 March is ultimately a matter for the FCA, exercising their powers under the Money Laundering Regulations.
In addition to existing businesses with temporary registration, the FCA is also assessing the applications of new businesses that wish to enter the market, and has admitted a number of these firms to the full register. The FCA are seeking to process all applications as swiftly as is possible whilst maintaining robust regulatory standards. Both Treasury and the FCA are committed to supporting the growth of the cryptoasset sector in a safe and competitive manner.
Since 10 January 2021, only cryptoasset businesses that have been admitted to either the Temporary Registration Regime or the FCA’s full register are permitted to carry on business in the UK. The FCA have a range of civil and criminal enforcement powers under the Money Laundering Regulations and, as of this month, have over 50 open investigations, including criminal probes, into apparently unauthorised cryptoasset businesses.
Asked by: Lord Cromwell (Crossbench - Excepted Hereditary)
Question to the HM Treasury:
To ask Her Majesty's Government what discussions they have had with the Financial Conduct Authority regarding the number of cryptoasset firms that are still awaiting registration by the FCA ahead of the deadline on 31 March.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
As of 24 March 2022, 16 cryptoasset businesses are within the FCA’s Temporary Registration Regime. The FCA have concluded assessment of all firms and are expecting further updates from some of these firms before their temporary registration ends. All firms remaining on the regime are aware of what is required from them to conclude their application.
Treasury officials are in regular contact with their counterparts at the FCA regarding the status of these firms, as well as the anti-money laundering regime for cryptoassets in general. Any decision about whether or not to extend the Temporary Registration Regime beyond 31 March is ultimately a matter for the FCA, exercising their powers under the Money Laundering Regulations.
In addition to existing businesses with temporary registration, the FCA is also assessing the applications of new businesses that wish to enter the market, and has admitted a number of these firms to the full register. The FCA are seeking to process all applications as swiftly as is possible whilst maintaining robust regulatory standards. Both Treasury and the FCA are committed to supporting the growth of the cryptoasset sector in a safe and competitive manner.
Since 10 January 2021, only cryptoasset businesses that have been admitted to either the Temporary Registration Regime or the FCA’s full register are permitted to carry on business in the UK. The FCA have a range of civil and criminal enforcement powers under the Money Laundering Regulations and, as of this month, have over 50 open investigations, including criminal probes, into apparently unauthorised cryptoasset businesses.
Asked by: Lord Cromwell (Crossbench - Excepted Hereditary)
Question to the HM Treasury:
To ask Her Majesty's Government what plans they have to accelerate registration with the Financial Conduct Authority of companies involved in the crypto sector.
Answered by Viscount Younger of Leckie - Parliamentary Under-Secretary (Department for Work and Pensions)
To comply with the Money Laundering Regulations (MLRs), cryptoasset firms must demonstrate systems, controls, policies and procedures adequate to deal with the particular risks of the cryptoasset market; any officers, managers and beneficial owners must be fit and proper; and they are required to register with the FCA for the purposes of money laundering supervision.
In some cases, the FCA has needed to request additional information from firms when applications contained insufficient supporting information and evidence. The application process for cryptoasset firms has therefore taken longer than originally anticipated.
The government does not believe it would be appropriate for the FCA to relax the standard against which firms are assessed. To do so would risk undermining the UK’s high anti-money laundering and counter-terrorist financing standards.
To manage delays in the processing of applications for registration, the FCA has established the Temporary Registration Regime. It allows existing cryptoasset firms, which had applied to be registered with the FCA by 16 December 2020, to continue trading whilst their applications are assessed. This has prevented undue disruption to established cryptoasset businesses and their customers, whilst ensuring all firms are subject to a rigorous assessment process.
Asked by: Lord Cromwell (Crossbench - Excepted Hereditary)
Question to the HM Treasury:
To ask Her Majesty's Government what plans they have to teach consumers about the (1) nature, (2) taxation, and (3) levels of protection of digital assets, such as crypto currency; in particular, including through making the rules about advertising such digital products consistent with other risk assets.
Answered by Viscount Younger of Leckie - Parliamentary Under-Secretary (Department for Work and Pensions)
The Government established a Cryptoassets Taskforce in 2018, consisting of HM Treasury, the Bank of England and the Financial Conduct Authority (FCA). The Cryptoasset Taskforce is responsible for assessing developments in the cryptoasset market, and deciding what, if any, regulation is required in response.
HM Treasury and UK authorities have taken a series of actions to support innovation while mitigating risks to stability and market integrity. These include launching a new anti-money laundering and counter-terrorist financing regime for cryptoassets in 2020; and consulting on a proposal to ensure cryptoassets known as ‘stablecoins’ meet the same high standards expected of other payment methods. The Government will issue its response to this consultation shortly. On 18 January 2022, the Government announced its intention to legislate later this year to bring certain cryptoassets into the scope of financial promotions regulation, requiring them to be fair, clear and not misleading. This is aimed at improving consumers’ understanding of the risks and benefits associated with cryptoasset purchases, and ensuring that cryptoasset promotions are held to the same high standards as broader financial services products.
Consumer research conducted by the FCA in 2021 estimated that 2.3 million people in the UK currently hold cryptoassets. The FCA has announced plans for an £11 million digital marketing campaign to educate consumers on the risks associated with certain high-risk investments, including cryptoassets.
Profits from trading in and gains from disposing of cryptoassets are taxed in the same way and at the same rate as those from other assets. HMRC’s Cryptoassets Manual, one the most detailed publications from any tax administration, explains the tax consequences of different types of transactions involving cryptoassets for both businesses accepting them and individuals using them.
Cryptoassets are unregulated; this means they are not subject to consumer protection regulation and investors will not have recourse to the Financial Ombudsman Service, or the Financial Services Compensation Scheme.
The Government does not currently plan to create a new regulator for cryptoassets. The Government launched a consultation on its regulatory approach to cryptoassets and stablecoins on 7 January 2021. It proposed new regulatory responsibilities for the FCA, Bank of England and Payment Systems Regulator (PSR).
Asked by: Lord Cromwell (Crossbench - Excepted Hereditary)
Question to the HM Treasury:
To ask Her Majesty's Government what plans they have to expand consumer protection in relation to crypto assets, in particular through access to the (1) Financial Ombudsman Service, and (2) Financial Services Compensation Scheme.
Answered by Viscount Younger of Leckie - Parliamentary Under-Secretary (Department for Work and Pensions)
The Government established a Cryptoassets Taskforce in 2018, consisting of HM Treasury, the Bank of England and the Financial Conduct Authority (FCA). The Cryptoasset Taskforce is responsible for assessing developments in the cryptoasset market, and deciding what, if any, regulation is required in response.
HM Treasury and UK authorities have taken a series of actions to support innovation while mitigating risks to stability and market integrity. These include launching a new anti-money laundering and counter-terrorist financing regime for cryptoassets in 2020; and consulting on a proposal to ensure cryptoassets known as ‘stablecoins’ meet the same high standards expected of other payment methods. The Government will issue its response to this consultation shortly. On 18 January 2022, the Government announced its intention to legislate later this year to bring certain cryptoassets into the scope of financial promotions regulation, requiring them to be fair, clear and not misleading. This is aimed at improving consumers’ understanding of the risks and benefits associated with cryptoasset purchases, and ensuring that cryptoasset promotions are held to the same high standards as broader financial services products.
Consumer research conducted by the FCA in 2021 estimated that 2.3 million people in the UK currently hold cryptoassets. The FCA has announced plans for an £11 million digital marketing campaign to educate consumers on the risks associated with certain high-risk investments, including cryptoassets.
Profits from trading in and gains from disposing of cryptoassets are taxed in the same way and at the same rate as those from other assets. HMRC’s Cryptoassets Manual, one the most detailed publications from any tax administration, explains the tax consequences of different types of transactions involving cryptoassets for both businesses accepting them and individuals using them.
Cryptoassets are unregulated; this means they are not subject to consumer protection regulation and investors will not have recourse to the Financial Ombudsman Service, or the Financial Services Compensation Scheme.
The Government does not currently plan to create a new regulator for cryptoassets. The Government launched a consultation on its regulatory approach to cryptoassets and stablecoins on 7 January 2021. It proposed new regulatory responsibilities for the FCA, Bank of England and Payment Systems Regulator (PSR).
Asked by: Lord Cromwell (Crossbench - Excepted Hereditary)
Question to the HM Treasury:
To ask Her Majesty's Government what plans they have to increase the skills in the workforce of regulatory authorities in relation to crypto assets.
Answered by Viscount Younger of Leckie - Parliamentary Under-Secretary (Department for Work and Pensions)
The Government established a Cryptoassets Taskforce in 2018, consisting of HM Treasury, the Bank of England and the Financial Conduct Authority (FCA). The Cryptoasset Taskforce is responsible for assessing developments in the cryptoasset market, and deciding what, if any, regulation is required in response.
HM Treasury and UK authorities have taken a series of actions to support innovation while mitigating risks to stability and market integrity. These include launching a new anti-money laundering and counter-terrorist financing regime for cryptoassets in 2020; and consulting on a proposal to ensure cryptoassets known as ‘stablecoins’ meet the same high standards expected of other payment methods. The Government will issue its response to this consultation shortly. On 18 January 2022, the Government announced its intention to legislate later this year to bring certain cryptoassets into the scope of financial promotions regulation, requiring them to be fair, clear and not misleading. This is aimed at improving consumers’ understanding of the risks and benefits associated with cryptoasset purchases, and ensuring that cryptoasset promotions are held to the same high standards as broader financial services products.
Consumer research conducted by the FCA in 2021 estimated that 2.3 million people in the UK currently hold cryptoassets. The FCA has announced plans for an £11 million digital marketing campaign to educate consumers on the risks associated with certain high-risk investments, including cryptoassets.
Profits from trading in and gains from disposing of cryptoassets are taxed in the same way and at the same rate as those from other assets. HMRC’s Cryptoassets Manual, one the most detailed publications from any tax administration, explains the tax consequences of different types of transactions involving cryptoassets for both businesses accepting them and individuals using them.
Cryptoassets are unregulated; this means they are not subject to consumer protection regulation and investors will not have recourse to the Financial Ombudsman Service, or the Financial Services Compensation Scheme.
The Government does not currently plan to create a new regulator for cryptoassets. The Government launched a consultation on its regulatory approach to cryptoassets and stablecoins on 7 January 2021. It proposed new regulatory responsibilities for the FCA, Bank of England and Payment Systems Regulator (PSR).
Asked by: Lord Cromwell (Crossbench - Excepted Hereditary)
Question to the HM Treasury:
To ask Her Majesty's Government what their timetable is to (1) determine, or (2) create, an appropriate regulatory authority with a full regulatory perimeter for crypto assets.
Answered by Viscount Younger of Leckie - Parliamentary Under-Secretary (Department for Work and Pensions)
The Government established a Cryptoassets Taskforce in 2018, consisting of HM Treasury, the Bank of England and the Financial Conduct Authority (FCA). The Cryptoasset Taskforce is responsible for assessing developments in the cryptoasset market, and deciding what, if any, regulation is required in response.
HM Treasury and UK authorities have taken a series of actions to support innovation while mitigating risks to stability and market integrity. These include launching a new anti-money laundering and counter-terrorist financing regime for cryptoassets in 2020; and consulting on a proposal to ensure cryptoassets known as ‘stablecoins’ meet the same high standards expected of other payment methods. The Government will issue its response to this consultation shortly. On 18 January 2022, the Government announced its intention to legislate later this year to bring certain cryptoassets into the scope of financial promotions regulation, requiring them to be fair, clear and not misleading. This is aimed at improving consumers’ understanding of the risks and benefits associated with cryptoasset purchases, and ensuring that cryptoasset promotions are held to the same high standards as broader financial services products.
Consumer research conducted by the FCA in 2021 estimated that 2.3 million people in the UK currently hold cryptoassets. The FCA has announced plans for an £11 million digital marketing campaign to educate consumers on the risks associated with certain high-risk investments, including cryptoassets.
Profits from trading in and gains from disposing of cryptoassets are taxed in the same way and at the same rate as those from other assets. HMRC’s Cryptoassets Manual, one the most detailed publications from any tax administration, explains the tax consequences of different types of transactions involving cryptoassets for both businesses accepting them and individuals using them.
Cryptoassets are unregulated; this means they are not subject to consumer protection regulation and investors will not have recourse to the Financial Ombudsman Service, or the Financial Services Compensation Scheme.
The Government does not currently plan to create a new regulator for cryptoassets. The Government launched a consultation on its regulatory approach to cryptoassets and stablecoins on 7 January 2021. It proposed new regulatory responsibilities for the FCA, Bank of England and Payment Systems Regulator (PSR).
Asked by: Lord Cromwell (Crossbench - Excepted Hereditary)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of (1) the size of the market for (a) cryptocurrencies, and (b) other digital assets, in the UK, and (2) the need for legislation to facilitate a well-regulated market of these; whether they have any plans to introduce legislation in order to regular this market; and if so, what is the timetable for that legislation.
Answered by Viscount Younger of Leckie - Parliamentary Under-Secretary (Department for Work and Pensions)
The Government established a Cryptoassets Taskforce in 2018, consisting of HM Treasury, the Bank of England and the Financial Conduct Authority (FCA). The Cryptoasset Taskforce is responsible for assessing developments in the cryptoasset market, and deciding what, if any, regulation is required in response.
HM Treasury and UK authorities have taken a series of actions to support innovation while mitigating risks to stability and market integrity. These include launching a new anti-money laundering and counter-terrorist financing regime for cryptoassets in 2020; and consulting on a proposal to ensure cryptoassets known as ‘stablecoins’ meet the same high standards expected of other payment methods. The Government will issue its response to this consultation shortly. On 18 January 2022, the Government announced its intention to legislate later this year to bring certain cryptoassets into the scope of financial promotions regulation, requiring them to be fair, clear and not misleading. This is aimed at improving consumers’ understanding of the risks and benefits associated with cryptoasset purchases, and ensuring that cryptoasset promotions are held to the same high standards as broader financial services products.
Consumer research conducted by the FCA in 2021 estimated that 2.3 million people in the UK currently hold cryptoassets. The FCA has announced plans for an £11 million digital marketing campaign to educate consumers on the risks associated with certain high-risk investments, including cryptoassets.
Profits from trading in and gains from disposing of cryptoassets are taxed in the same way and at the same rate as those from other assets. HMRC’s Cryptoassets Manual, one the most detailed publications from any tax administration, explains the tax consequences of different types of transactions involving cryptoassets for both businesses accepting them and individuals using them.
Cryptoassets are unregulated; this means they are not subject to consumer protection regulation and investors will not have recourse to the Financial Ombudsman Service, or the Financial Services Compensation Scheme.
The Government does not currently plan to create a new regulator for cryptoassets. The Government launched a consultation on its regulatory approach to cryptoassets and stablecoins on 7 January 2021. It proposed new regulatory responsibilities for the FCA, Bank of England and Payment Systems Regulator (PSR).
Asked by: Lord Cromwell (Crossbench - Excepted Hereditary)
Question to the Department for Digital, Culture, Media & Sport:
To ask Her Majesty's Government, given the “real danger that hostile actors use online disinformation to undermine” the UK’s “democratic values and principles” outlined in their Online Harms White Paper, published in April 2019, what steps they plan to take to empower the proposed independent regulator to require online platforms to take down such material that may be perceived to have an impact on an electoral contest; and what guidance they plan to give to that regulator about how any such decision should be reached.
Answered by Baroness Barran - Parliamentary Under-Secretary (Department for Education)
On 12 February the Government published its Initial Consultation Response to the Online Harms White Paper. This sets out our direction of travel on a number of key areas, including that we are minded to appoint Ofcom as the regulator for online harms, and more detail on the proposed approach of the regulator. The response also confirmed that a media literacy strategy will be published in Summer 2020 and aim to support citizens in thinking critically about the things they come across online. More detailed proposals on online harms regulation will be released in the spring.
The Government has also established the Defending Democracy programme to bring together expertise and ongoing work on protecting democratic processes from different departments. This programme, led by the Cabinet Office, has been set up to:
protect and secure UK democratic processes, systems and institutions from interference, including from cyber, personnel and physical threats;
strengthen the integrity of UK elections;
encourage respect for open, fair and safe democratic participation; and
promote fact-based and open discourse, including online.
As part of this work, we engage regularly with social media companies to understand the actions they are taking to prevent misuse of their platforms.