The UK Treasury has announced that businesses involved in non-fungible tokens (NFTs) will be required to register with the Financial Conduct Authority (FCA) as part of the government’s ongoing efforts to refine cryptocurrency regulations. This extends the FCA’s oversight to include NFT issuers for anti-money laundering (AML) and counter-terrorist financing (CTF) purposes. While NFTs are expected to remain outside the scope of regulated financial services, they will fall under the regulatory framework for AML and CTF. This move is in line with the UK’s approach to tightening regulations in the crypto market, which already requires firms to register with the FCA to operate in the country.
The Financial Services and Markets Act, which was passed last year and treats crypto activities as regulated financial services, does not categorize NFTs as financial services unless they are used in regulated activities. This means that while direct financial services involving NFTs may not be regulated, issuers must comply with AML and CTF regulations overseen by the FCA.
The consultation document from the Treasury also suggests that there may be an expanded regulatory scope as the crypto industry continues to evolve, potentially requiring more firms to register with the FCA in the future. The government is seeking feedback on the proposed regulatory framework, signaling a willingness to engage in an open dialogue with industry participants on the future of crypto regulation in the UK.