urity tokens: These are tokens with specific characteristics that mean they provide rights and obligations akin to specified investments, like a share or a debt instrument as set out in the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001. These tokens are within the perimeter, and subject to regulation in the same way as other securities.
Presence of any explicit restrictions on ICOs or the issuance, distribution and/or transfer of token/coins
See above.
Obligations and requirements to issue token/coins
There is no specific or overarching regulation dealing with coins or token sales in the UK.
However, offering coins or tokens that can be categorised as securities or E-Money (see above) may be subject to the restriction on financial promotions.
Activities concerning coins or tokens will be subject to regulation in the same way as other securities (such as arranging deals in investments, etc. and in some cases to the UK Prospectus Regulation Rules (which implement the UK version of the EU Prospectus Regulation (2017/1129))) and so require FCA authorisation (unless one of the generally available exemptions applies).
Coins or tokens having the characteristics of E-Money will be regulated as such, and so issuing and so issuing coins or tokens that are E-Money will require authorisation (or registration) as an E-Money institution.
Classification of token/coins in the jurisdiction
By itself, crypto currency is unregulated and treated in the same way as a foreign currency, but please see above with regard to tokens or coins that can be categorised as securities or E-Money.
Where a coin or token has the same characteristics as a security or E-Money, it will be categorised as such and subject to regulation.
Profits made on dealings in token/coins will be subject to taxation (whether as income or capital gains) whether or not regulated.
Presence of a duty to publish a prospectus bevor offering token/coins to investors
Where a token constitutes a transferable security, it may fall within the UK’s prospectus regime (see above)
Presence of AML/KYC requirements that are needed to be fulfilled regarding (i) the initial issuance of token/coins and (ii) any following transfer of token/coins to third parties
Where tokens or coins are not securities or E-Money, no specific AML/ KYC obligations apply.
Regulated firms are subject to AML obligations under the MLRs, whether or not the activity undertaken is regulated.
General law (Proceeds of Crime Act 2002) creates three criminal offences concerning the possession, concealment, conversion, transfer or making of arrangements relating to the proceeds of crime. The offenses all require knowledge (mens rea) of the facts giving rise to the crime (e.g. that the asset dealt in is the proceeds of crime). The definition of proceeds of crime is very wide (including, for example, tax evasion, or assets received in breach of a regulatory obligation imposing a criminal liability). The Proceeds of Crime Act 2002 applies generally whether or not a person is authorised or carrying on a regulated activity.
Additional comments regarding (i) the legal situation for ICOs/token/coins and (ii) any following transfer of token/coins to third parties
The FCA generally takes a cautious approach to dealings in crypto assets and has issued various warnings to consumers and to regulated firms as to the risks.
Dealers in crypto currency are required to register with the FCA, and to comply with MLRs, but are not required to become authorised as such.
Economic conditions
Market size for ICOs/token sales and existence of any previous regulated ICO/token sales in the jurisdiction
As the market in ICOs / token sales is not separately