Launchy Regulatory Roundup #19- UK to Ban Public Crypto Offers Under New FCA Rules

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Welcome to our 19th edition of the regulatory roundup. If you know anybody who would benefit from this content, please help us spread the word!

Good Morning,

While everything seems to be going well in the US, here’s some news from the UK:

The FCA’s plan to ban public crypto offers is making waves. This could push innovation somewhere else and raise questions about the UK’s ability to stay competitive in the global crypto space.

In Today's Edition:

• Headline: UK to Ban Public Crypto Offers Under New FCA Rules 🇬🇧 

• Global Legal Roundup: Exodus to be listed on NYSE, UK vs Crypto 🌐 

• Case Study: ESMA Final Guidance for MiCA 🇪🇺 

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HEADLINE

UK to Ban Public Crypto Offers Under New FCA Rules

State of play: The UK’s Financial Conduct Authority (FCA) announced plans to prohibit public offers of crypto assets, as detailed in its latest paper on the incoming crypto regulatory framework.

• The plan builds on existing promotion rules that prevent unregistered crypto firms from targeting UK clients.

• The new legislation is expected to take effect in 2026.

• The legislation will likely allow exceptions for crypto asset trading platforms and offers that meet specific criteria.

• The FCA has been overseeing the crypto sector’s compliance with anti-money laundering rules since 2020.

• The FCA is now seeking industry input on market admission standards, disclosures, and a market abuse regime.

What’s Next: Additional papers and consultations are expected as the FCA refines the framework to provide consumers with clearer information for making informed decisions.

Why it Matters: The UK's decision to restrict public crypto offers reflects a cautious approach. While it aims to bring clarity and security, it may stifle access for everyday investors and slow innovation in the crypto space.

Our Take: This move risks limiting the UK’s potential as a global crypto hub. While consumer protection is crucial, overly restrictive measures could drive crypto activity offshore, reducing opportunities for innovation and growth domestically.

GLOBAL LEGAL ROUNDUP

America:

• 🇨🇦 British Columbia maintains Bitcoin mining ban.

• 🇺🇲 Interpol issues 'Red Notice' for Hex founder Richard Heart.

• 🇺🇲 US shuts down North Korean crypto money laundering network.

• 🇺🇲 Jump Crypto subsidiary Tai Mo Shan settles with SEC for $123M.

• 🇺🇲 Next US Senate Banking Chair calls crypto 'next wonder' of world.

• 🇺🇸 SEC approves Exodus to list on NYSE American after denying it in May.

• 🇺🇲 Investor lawsuit filed against Hawk Tuah memecoin creators, partners.

• 🇸🇻 El Salvador to shut or sell chivo crypto wallet as part of $3.5B IMF deal.

Europe:

• 🇳🇱 ZBD approved to receive EU MiCA License by Dutch regulator.

• 🇩🇪 German watchdog orders Worldcoin to delete non-compliant data.

• 🇬🇧 Google to require FCA registration for crypto ads targeting the UK.

• 🇬🇧 Barclays-backed Copper withdraws UK crypto license application.

• 🇫🇷 French regulator authorizes crypto operations for BPCE subsidiary.

APAC:

• 🇦🇺 Binance Australia sued over alleged consumer protection breaches.

CASE STUDY

ESMA Final Guidance for MiCA

State of play: The European Securities and Markets Authority (ESMA) has released its final guidance to support EU member states in implementing the Markets in Crypto Assets (MiCA) regulatory framework, which is set to take effect on December 30, 2024.

• The guidance includes critical insights on reverse solicitation, the classification of certain crypto as financial instruments, and draft technical standards for preventing market abuse.

ESMA Key Guidelines and Standards:

• Market Abuse: Defines procedures to detect, report, and address market abuse in crypto-assets.

• Reverse Solicitation: Limits exemptions to client-initiated services only, avoiding misuse to bypass MiCA rules.

• Suitability: Aligns CASP advice and portfolio management rules with MiFID II for consistent standards.

• Crypto Transfers: Ensures investor protection through CASP policies for crypto-asset transfers.

• Financial Instruments: Clarifies criteria for classifying crypto-assets under MiCA or MiFID II.

• System Security: Sets ICT risk management rules for entities not covered by MiCA or DORA.

Despite the imminent deadline, several countries have struggled to finalize legislation, with Portugal's central bank acknowledging it has yet to determine which national authority will oversee compliance.

• Industry associations attribute these delays to the limited time available between ESMA’s release of final technical standards in October and the end-of-year enforcement deadline.

Our Take: While MiCA offers a clear framework for market integrity and investor protection, successful adoption will require coordinated efforts from regulators and the industry to avoid fragmentation and support innovation.

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NOTEWORTHY READS & MEME

• Coinbase’s Transparency Report 2024.

• Coincenter’s article on clearer crypto tax rules.

• WSJ’s article on crypto hedge funds banking issues.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.