Well, almost.  As part of the latest amendments to the Financial Services and Markets Bill, the government has introduced a number of provisions which lay the foundations for Treasury and the FCA to devise a regulatory framework for cryptoassets that currently fall outside of the regulatory perimeter.  This is distinct from Treasury’s previous proposals in respect of stablecoins. 

The amendments clarify that cryptoassets may be regulated using the Treasury’s new power under the designated activities regime.  This allows Treasury to deem certain activities as “designated activities”, in relation to which the FCA will have rule-making powers.  Although the amendments do not in themselves outline a regulatory framework for cryptoassets, the express inclusion of cryptoassets as part of the designated activities regime does suggest specific regulations will follow.

The proposed definition of cryptoassets is a familiar one:

“cryptoasset” means any cryptographically secured digital representation of value or contractual rights that:

• can be transferred, stored or traded electronically, and
• that uses technology supporting the recording or storage of data (which may include distributed ledger technology).

Treasury reserves the power to change this definition.

The amendments also introduce changes which clarify that the powers relating to financial promotions and regulated activities under FSMA can also be used to regulate cryptoassets and activities relating to cryptoassets.  While the inclusion of cryptoassets within the financial promotions regime is expected, less so is the inclusion within the regulated activities definition.  This means that Treasury will have the power to specify that cryptoassets should fall within the existing regulatory perimeter.

As it stands therefore, cryptoasset regulation could come to fruition through a variety of different avenues.  However, it looks like we will have to wait and see what any specific regulation might look like until after the Financial Services and Markets Bill is passed and comes into force, that is assuming these amendments survive the process.