NFT Providers May Need Registration to Comply With UK Money Laundering Rules

The U.K. started a consultation on its money laundering rules on Monday.

AccessTimeIconMar 12, 2024 at 4:37 p.m. UTC
Updated Mar 12, 2024 at 4:39 p.m. UTC
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  • NFT providers may need to be registered with the Financial Conduct Authority, the Treasury said in a consultation on money laundering regulations.
  • NFTs are unlikely to be covered by the rules for financial services, which will have a separate authorization regime.
  • The deadline for responses is June 9.

Crypto businesses that issue non-fungible tokens (NFTs) in the U.K. rather than providing financial services will probably need to register with the Financial Conduct Authority even after the government introduces a new authorization regime for the industry, according to a consultation on money laundering issued by the Treasury on Monday.

The government has been refining its crypto regulation environment, and last year said it planned to bring crypto exchanges and custody providers into the new crypto authorization regime. Currently, the firms must be registered with the FCA, which covers money laundering and terrorism financing safeguards, to be able to operate in the country. Once the new regime is up and running, that won't be necessary.

However, crypto assets that are not used in relation to any regulated financial services, such as NFTs, are likely to fall outside the regime, according to the consultation. NFTs are unique tokens that are tied to the blockchain that usually represent an asset like art.

"These crypto asset firms will still need to be registered and supervised by the FCA for anti-money laundering and counter terrorist financing purposes," the document said.

The Financial Services and Markets Act passed last year and paved the way for crypto to be treated like a regulated financial activity. In a consultation response from October, the government said NFT's "were not appropriate for regulation as a financial service." They would fall within the financial services regime only if used for regulated activities.

The number of firms that may need to get registered may "widen as the industry continues to develop," the new consultation document said.

The U.K. government wants to collect responses on the proposed regime by June 9.

Edited by Sheldon Reback.


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Camomile Shumba

Camomile Shumba is a CoinDesk regulatory reporter based in the UK. She previously worked as an intern for Business Insider and Bloomberg News. She does not currently hold value in any digital currencies or projects.

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