Bitcoin Is Not a Generic Cryptoasset: Our Open Letter to the FCA

Bitcoin Policy UK wrote to Nikhil Rathi, Chief Executive of the Financial Conduct Authority, about how Bitcoin is treated under the UK's new cryptoasset regime. The letter supports the principle of “same risk, same regulation”, but argues that applying identical rules to every cryptoasset works against it. Bitcoin has no issuer, company or controlling organisation able to change its monetary policy, allocate supply to insiders or make disclosures for the network, while many other tokens have identifiable issuers who can influence supply and promotion. The letter accepts that firms offering Bitcoin services can cause harm through custody failures, conflicts of interest, rehypothecation, poor execution and misleading promotions, and says regulation should target those activities.

It warns that rules written for issuers and centrally managed projects add costs that do not match Bitcoin's risks. Large global firms may be able to absorb those costs, while smaller UK businesses may decide the market is not worth entering or remaining in, pushing consumers towards overseas or less regulated services. The letter welcomes the FCA's clarification that self custody arrangements fall outside the safeguarding perimeter where the provider has no means of control, and asks that non-custodial wallet developers, open source maintainers, node operators and miners are kept outside rules meant for intermediaries. It sets out five questions, including whether the FCA will publish guidance on where Bitcoin justifies different treatment and whether it will review Bitcoin's classification as a Restricted Mass Market Investment, which BPUK says is incorrect, and asks for a meeting.