Financial Conduct Authority: Bitcoin Has “No Intrinsic Value”

Reading Time: 2 minutes

The UK’s Financial Conduct Authority (FCA) has finalized its guidance on digital assets for UK crypto businesses, and in doing so has labelled tokens such as Bitcoin, Ethereum, and XRP as having “no intrinsic value.” The guidance confirms that the FCA will not seek regulation for these tokens, but this hasn’t stopped some doom mongers suggesting that Britain is about to ban Bitcoin.

Clear Guidance for UK Crypto Firms

In its Final Guidance, the FCA splits the tokens that make up the cryptocurrency market into two main categories with various subcategories, which could have huge ramifications for UK crypto companies:

Unregulated tokens:

  • Exchange tokens – cryptocurrencies used for “buying and selling goods and services without traditional intermediaries”, e.g. BTC, XMR. Not to be confused with actual exchange tokens (e.g. BNB, KCS). These fall outside the FCA’s perimeter.
  • Utility tokens – tokens that grant holders access to a specific platform or service, with some also acting as a currency (e.g. XRP, IOTA). In the main, these will fall outside the FCA’s perimeter

Regulated tokens:

  • Security tokens – tokens that provide “rights and obligations akin to specified investments”. These tokens must be regulated from the outset, and as such fall within the FCA’s perimeter.
  • E-money Tokens – tokens that “meet the definition of electronic money in EMRs” (Electronic Money Regulations 2011). These don’t necessarily include stablecoins, whose real-world backing cannot be verified by regulators.

The classification means that British crypto firms that have issued tokens under the belief that they didn’t require regulation may now find that they in fact do, which was something experienced by security token INDX who had to delay progress for around a year in 2018 because of their anticipation of such a ruling. As well as offering guidance for crypto businesses, the importance of a token falling within the FCA’s perimeter is that token holders will have some form of legal recourse in the case of a collapse of the project or illegal activity by the operator.

No, the UK is Not Banning Bitcoin

Despite the fact that the report is essentially neutral on cryptocurrencies, and certainly not as negative as some of the comments in the US recently, some still took them to mean a ban was coming. Forbes cited Herbert Sim, head of business development from Broctagon Fintech Group, as saying that the incendiary statement about Bitcoin, which was clearly meant as a warning to uneducated would-be investors, was “not a ban” but was still “a move in that direction”. This was immediately disputed on social media, and rightly so, as the comment came at the very end of a short press release about the report and was not reflective in any way of the tone in the guidance itself, which has not in fact changed as the crypto markets have blossomed.