CFA Institute and CFA UK respond to the FCA’s cryptoasset perimeter guidance, supporting a substance over form approach while recommending enhanced clarity on custody, conflicts of interest, discretionary style services, and retail risks in cryptoasset lending arrangements.
Set out below are our high-level positions:
- Framework and functional approach — We support the FCA’s technology‑neutral, activity‑based framework anchored in substance over form and “same activity, same risk, same regulatory outcome.” We encourage clearer articulation of guiding principles to support consistent application as market structures evolve.
- Regulated activities and client outcomes — While we support the activity-based approach, we highlight gaps where services economically resemble discretionary portfolio management but are captured through dealing, arranging, or safeguarding permissions. Additional examples are needed to reduce mismatched client expectations and regulatory arbitrage.
- Custody, control, and safeguarding — We support the FCA’s control-based interpretation of safeguarding and recommend further clarification on assisted self‑custody and hybrid models. Arrangements that retain elements of control should be assessed carefully to ensure appropriate investor protection.
- Trading platforms and conflicts — We caution against treating matched principal trading by platform operators as a routine extension of permissions. Combining platform operation with principal dealing introduces structural conflicts that require stronger regulatory signalling and, where necessary, structural mitigants.
- Lending, exclusions, and cross-regime clarity — We emphasise the risks in cryptoasset lending and borrowing, particularly for retail investors, and recommend clearer examples to reflect their multi-activity nature. Exclusions should not weaken client-asset protection, and greater clarity is needed on the interaction between FSMA authorisation, MLR registration, and financial promotion requirements.
Conclusion
CFA Institute and CFA UK support the FCA’s ambition to establish a clear and coherent cryptoasset regulatory framework. Our recommendations aim to strengthen investor protection, reduce ambiguity, and ensure that regulatory outcomes align with the economic substance of cryptoasset activities.