To date, the Financial Conduct Authority (FCA), the UK financial services regulator has made clear (via its Feedback statement on DLT) that cryptocurrencies are not currently regulated, provided they are not part of any other regulated products or services.

Nonetheless it has published a series of consumer warnings  – on ICOs and the risks of investing in cryptocurrency CFDs.

On April 6, 2018 the FCA issued a further statement warning that, in its view, cryptocurrency derivatives are capable of being financial instruments under the Markets in Financial Instruments Directive II (MIFID II), although the FCA does not consider cryptocurrencies to be currencies or commodities for regulatory purposes under MiFID II.

Firms conducting regulated activities in cryptocurrency derivatives must, therefore, comply with all applicable rules in the FCA’s Handbook and any relevant provisions in directly applicable European Union regulations.

The FCA believes that it is likely that dealing in, arranging transactions in, advising on or providing other services that amount to regulated activities in relation to derivatives that reference either cryptocurrencies or tokens will require FCA authorisation.

This includes:

  • cryptocurrency futures – derivative contracts in which each party agrees to exchange cryptocurrency at future date and at price agreed;
  • cryptocurrency contracts for differences (CFDs) – a cash-settled derivative contract in which the parties seek to secure profit or avoid loss by agreeing to exchange difference in price between value of cryptocurrency CFD contract at its outset and at its termination; and
  • cryptocurrency options – a contract which grants beneficiary rights to acquire or dispose of cryptocurrencies.

The regulator reminds firms that is their responsibility to ensure that they have the appropriate authorisation and permission to carry on regulated activity. If an organisation is not authorised by the FCA and is offering products or services requiring authorisation it is a criminal offence. Authorised firms offering these products without the appropriate permission may be subject to enforcement action.


Sue McLean is a partner in the IT/Commercial Practice Group in Baker McKenzie's London office. Sue advises clients on technology, sourcing and digital media business models and deals, as well as the legal issues relating to the implementation of new technologies. Sue advises clients (both customers and suppliers) on a wide range of technology matters including outsourcing, digital transformation, technology procurement, development and licensing, m/e-commerce, cloud computing, AI, FinTech, blockchain/DLT, social media, data privacy and cybersecurity. Sue also advises on commercial agreements and the commercial, technology and intellectual property aspects of M&A transactions and joint ventures. Sue has experience across various business sectors, including the financial services, consumer, TMT, travel and life sciences industries. She regularly speaks and writes about the impact of disruptive technologies and has a regular blog for Computerworld.