BetterNews #5: September to remember

This issue covers regulatory news for September from regulators in jurisdictions that are no strangers to crypto world, such as Switzerland, United Kingdom, Australia and France, as well as one new country which is entering in this field — Uzbekistan.


Swiss Financial Markets Supervisory Authority (FINMA) stated that certain business activities in connection with virtual currencies may require a license, which should come to special attention of wallet providers and businesses that accept cryptocurrency on regular basis as part of their activities.

The UK Treasury Committee published a report listing the main risks associated with crypto-assets, which affects crypto investors and ICO projects, and emphasized the need of new regulation in this field.

The Australian Securities and Investments Commission (ASIC) stated its intentions to develop a new approach for regulating crypto exchanges and increase level of control over ICOs in order to protect the investors.

French regulators updated on the status of a bill which defines tokens and states that the French financial markets regulator (the AMF), will give optional licences to issuers of legitimate projects, provided that certain rules and criteria are met.

Uzbekistan introduced licensing requirements for cryptocurrency exchanges and clarified issues related to taxation of crypto-assets.

Detailed overview


The Swiss Financial Markets Supervisory Authority (FINMA) published a fact sheet on dealing with virtual currencies, such as Bitcoin. Market players that intend to operate a blockchain-based business in Switzerland must first find out whether any licensing requirements apply under local financial market legislation or not.

In its fact sheet FINMA stated that Switzerland has no regulation on the buying and selling of cryptocurrencies or their use to pay for goods and services. Although use of virtual currencies is possible without a license, it also connected with some risks. Since virtual currencies are based on technology that often facilitates anonymity and cross-border transfers, this entails increased risks of money laundering and terrorism financing. Certain business activities in connection with virtual currencies may require a license, for example the provision of custody wallet services falls under the Anti Money Laundering Act and requires registration with FINMA or joining a self-regulatory organization.

Other activities (e. g. organisations that accept money on a commercial basis from clients and keep it in their own account) may also require a banking licence and consequently leads to closer scrutiny by the regulator. This also applies if market players who accept deposits which are taken in the form of virtual currencies and are kept on own wallets. The requirement of a banking license may be waived if the deposits can be allocated to an individual customer at any time or if they are only transferred for safe custody.

Depending on the nature of virtual currency related activity license also might be required under a different financial market Act such as the Stock Exchange Act or the Financial Market Infrastructure Act.

If there are specific information regarding someone’s activity with virtual currencies requiring a license, FINMA can open investigations on the basis of this information. If the suspicion is justified, FINMA may open an enforcement procedure and restore compliance with the relevant laws.

United Kingdom

On September 19, 2018 the UK Treasury Committee published its Crypto-assets report and conclusions and recommendations (earlier this year the UK Treasury Committee launched an inquiry into digital currencies). In its report, the Treasury Committee listed some of the risks associated with crypto-assets, including the fact that they have no inherent value, are subject to volatility and are especially risky for retail investors.

Regulator noted that exchanges are also vulnerable to hacking, therefore users can lose significant amounts of money, and investor protection is minimal. Additionally, investors who have lost their passwords for access to wallets are often told by the firm operating their account that the password could not be restored, so funds are locked out permanently.

As stated in report crypto-assets fall outside of the FCA’s regulatory control.

Regulatory requirements in respect of ICO will depend on how it is structured and what the rights are attached to tokens. If an ICO falls within the FCA’s regulatory perimeter, the FCA would also be required to ensure an appropriate degree of protection for ICO investors.

However, when tokens represent a claim on prospective services or products, they do not amount to transferable securities or other regulated products and therefore they should not be subject to FCA’s regulations.

The report urged the introduction of regulation and for the FCA’s powers to be extended to oversee ICOs. In view of the Treasury Committee at a minimum, regulation should address consumer protection and anti-money laundering.

According to the report the following are the key risks areas associated with crypto-assets:

  • High price volatility (as mentioned above caused by lack of inherent value which makes crypto unsuitable for retail investors);
  • Hacking: hacks of crypto exchanges resulted in loss of significant amounts of money;
  • ICOs — these generally fall outside of regulation and the FCA has issued stark consumer warnings on associated risks. Investors can lose out due to inadequate business proposals, hacks, or fraud;
  • Money laundering and terrorist financing: transposition of the Fifth AML Directive into national legislation should be a priority;
  • Market manipulation: low trading volume and capitalisation creates a greater opportunity for price manipulation such as ‘pump and dump’ schemes;
  • Advertising and investor protections — according to the Committee FCA’s consumer warnings are a feeble corrective to misleading crypto-asset advertisements.

Committee concludes that introducing a regulation of crypto and associated activities by extending and amending the scope of existing regulation would be the quickest method of providing the FCA with the necessary legal powers to act for protection of consumers and maintaining market integrity. Designing a new framework of regulation would take much longer.

The Committee also indicates that since crypto-assets are not being widely used, they present a low risk to financial stability.


Australia’s corporate regulator, the Australian Securities and Investments Commission (ASIC) has issued its Corporate plan for 2018–2022 (the Plan), in which it outlines current key areas of focus, including crypto-assets and articulating among others intentions to develop a new approach for regulating crypto exchanges and increase level of control over ICOs in order to protect investors.

Notwithstanding that the sector still represents a small portion of global assets, its fast growth is resulting in increased regulatory monitoring. In summary, the Plan:

  • acknowledges the significant impact that blockchain and distributed ledger technologies (DLT) are likely to have on Australia’s financial services industry;
  • identifies the innovations ASIC sees in blockchain (e.g. in middle and back-office functions that increase efficiencies in data processing, settlements and clearance functions); and
  • acknowledges that the growing popularity of ICOs to raise funds has attracted its increased regulatory attention and monitoring.

The regulator also stated that it had formed internal cross-team working groups to better coordinate its work on new supervisory approaches, and in relation to poor practices in a variety of sectors, including cryptocurrencies.

Individuals planning on launching ICOs or cryptocurrency exchanges in Australia should expect ASIC to:

  • continue developing its framework for regulating crypto exchanges; and
  • actively intervene in ICO or blockchain projects that threaten to cause harm to consumers and retail investors.

A month before, the Australian Transaction Reports and Analysis Centre, the country’s financial intelligence agency, set new rules that cryptocurrency exchanges must follow to combat money laundering and terrorism financing.


The French Minister for the Economy and Finance Bruno Le Maire has announced in a tweet that a legal framework on initial coin offerings has been adopted as part of the Action Plan for Business Growth and Transformation. According to the Minister’s tweet parliamentary committee has adopted Article 26 of the Pacte bill, which is currently going through Parliament.

The bill defines what token is and states that the French financial markets regulator (the AMF), will give optional licences to issuers of legitimate projects, provided that certain rules and criteria are followed.

According to the definition token is an intangible property in digital form representing one or more rights that may be issued, registered, retained or transferred by means of a shared electronic registration system that makes it possible to identify, directly or indirectly, the owner of the said property. Issuers will be expected to submit a white paper to the AMF containing all the information on the issuer and the offer so that buyers could make informed decisions about the ICO. The information in a white paper and any advertisement is required to be correct, not misleading and make any risks clear.

The AMF may also require the issuer to be established or registered in France and have a KYC procedures in place.

Tokens with the characteristics of a security would remain subject to the regime of the offer to the public of financial securities.


President of Uzbekistan signed Decree introduced licensing for cryptocurrency exchanges and setting the requirements they have to meet to operate in Uzbekistan.

The decree “On measures to organise the activities of crypto-exchanges in Uzbekistan” dated September 2, 2018 establishes that:

  • cryptocurrency-related income of entities and individuals will not be taxed;
  • operations with cryptocurrencies and foreign fiat currencies are not subject to currency control regulations if the person conducting them obtained license.

Decree defines crypto exchanges as entities that operate platforms used for sale, purchase and exchange of crypto assets. Crypto exchanges are not subject of securities regulations. License to operate crypto exchange might be granted only to foreign entities establishing subsidiary or ensuring other form of presence in Uzbekistan.

In order to obtain a crypto exchange licence, an applicant must meet a number of requirements:

  • an authorised capital equal in fiat currency to at least 30,000 minimum wages on the day of the filing of the application and the equivalent of 20,000 minimum wages should be reserved in a separate account with one of Uzbekistan’s commercial banks;
  • servers with crypto exchanges electronic software compliant with Resolution on licensing of crypto exchanges (to be enacted by National Agency of Project Management within a month from Decree’s publication) must be located in the territory of Uzbekistan, and
  • crypto exchange must have in place the rules for trading with provisions regulating listing, anti-money laundering procedures, market abuse and etc.

Exchanges are required to store for five years information about all transactions, identification data of users and other materials related to their interaction with customers, including business correspondence. Crypto exchanges will be allowed to receive remuneration for their services and determine procedures for charging fees. Their operators will be able to organise exchange transactions with residents and non-residents.

Decree also concerns cryptocurrency mining. The state-owned energy companies “Uzbekenergo” and “Uzbekgidroenergo” will be allocating land plots without holding auctions for mining premises for operations using over 100 KW/h of electricity.

Locations of land plots will be determined in coordination with the National Project Management Agency under the President’s administration and there relevant with local authorities.