UNITED KINGDOM Law and Practice Contributed by: James Burnie, Kathryn Dodds, Olga Antonova and Nicky Androsov, gunnercooke llp
gunnercooke llp 1 Cornhill London EC3V 3ND United Kingdom Tel: +44 755 737 1480 Email: James.Burnie@gunnercooke.com Web: www.gunnercooke.com
1. Fintech Market 1.1 Evolution of the Fintech Market
FSMA, by reference to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO), generally sets out which activities are regulated in the United Kingdom, as well as the powers of the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) (the two lead regulators for financial services in the UK) in respect of their over - sight of firms conducting such activities. FSMA also sets out the basis for the general prohibi - tion on making certain communications into the UK, where these relate to invitations or inducements to buy, sell, subscribe for or underwrite qualifying crypto- assets (defined as covering a large range of unregu - lated crypto-assets where they are both fungible and transferrable), without the appropriate approval from an FCA-authorised firm. This requirement is likely be replaced towards the end of next year with a require - ment instead to obtain a domestic UK authorisation in order to make such communications into the UK. The main exception to this currently is the fact that certain activities in relation to crypto-assets (specifi - cally acting as a crypto-asset exchange provider or custodian wallet provider) are specified in the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs). This has caused confusion as to, for example, the scope of the meaning of “making arrangements with a view to” a crypto-asset transaction. It has also caused friction in terms of the fact that the FCA generally has oversight over the conduct of business of firms within its remit, whereas the MLRs are focused solely on reducing the risk of money laundering and terrorist
The fintech market has developed at pace in the Unit - ed Kingdom, which is seeking to become a hub for fintech companies. A particular area of focus is the use of AI and crypto-assets, and in this respect it is interesting that the UK has taken a relatively slower approach to seeking to regulate AI, in line with the USA, whilst also making overtures to seek to align its approach to blockchain and crypto with that in the USA.
2. Fintech Business Models and Regulation in General 2.1 Predominant Business Models
The size of the United Kingdom as a financial services regulatory hub has meant that the full range of fintech firms are operating in the United Kingdom. The three largest areas of focus currently seen are: • blockchain and Web3; • artificial intelligence (AI); and • payment services. 2.2 Regulatory Regime In the UK there is one core regulatory regime, set out in the Financial Services and Markets Act 2000 (FSMA), as well as specific regimes for specific types of activity.
939 CHAMBERS.COM
Powered by FlippingBook