The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001

• Citation: S.I. 2001/544
• Sections: 412

Section 1 Citation

This Order may be cited as the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.

Section 2 Commencement

(1) Except as provided by paragraph (2), this Order comes into force on the day on which section 19 of the Act comes into force.

(2) This Order comes into force—

(a) for the purposes of articles 59, 60 and 87 (funeral plan contracts) on 1st January 2002; and

(b) for the purposes of articles 61 to 63, 88, 90 and 91 (regulated mortgage contracts) on such a day as the Treasury may specify .

(3) Any day specified under paragraph (2)(b) must be caused to be notified in the London, Edinburgh and Belfast Gazettes published not later than one week before that day.

Section 3 Interpretation

(1) In this Order—

“ the Act " means the Financial Services and Markets Act 2000;

“ acting as an insolvency practitioner ” is to be read with section 388 of the Insolvency Act 1986 or, as the case may be, article 3 of the Insolvency (Northern Ireland) Order 1989 and, in any provision of this Order which provides for activities to be excluded from a specified activity, references to things done by a person acting—

as an insolvency practitioner, or

in reasonable contemplation of that person’s appointment as an insolvency practitioner,

include anything done by the person’s firm in connection with that person so acting;

“ agreement provider ” has the meaning given by article 63J(3);

“ agreement seller ” has the meaning given by article 63J(3);

“ AIFM ” has the meaning given by regulation 4 of the Alternative Investment Fund Managers Regulations 2013;

“ aircraft operator ” has the meaning given in article 6 of the trading scheme order;

“ alternative investment fund managers directive ” means Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers;

“ annuities on human life " does not include superannuation allowances and annuities payable out of any fund applicable solely to the relief and maintenance of persons engaged, or who have been engaged, in any particular profession, trade or employment, or of the dependants of such persons;

“ assignment ”, in relation to a credit agreement, has the meaning given by article 60L;

“ auction platform ” means a platform on which auctions of greenhouse gas emissions allowances are held in accordance with the emission allowance auctioning regulation or the UK auctioning regulations ;

“ authorised cryptoasset custodian ” means an authorised person who has a Part 4A permission to carry on the regulated activity specified by article 9N(1)(a) (safeguarding of qualifying cryptoassets and relevant specified investment cryptoassets);

“ borrower ”—

in relation to a credit agreement other than a regulated mortgage contract or , an article 36H agreement (within the meaning given by article 36H) or an agreement that is a green deal plan , has the meaning given by article 60L;

in relation to an article 36H agreement (within the meaning given by that article) other than a regulated mortgage contract, has the meaning given by article 36H ;

in relation to a credit agreement that is a green deal plan, has the meaning given by article 60LB;

“ buying " includes acquiring for valuable consideration;

“ close relative " in relation to a person means—

his spouse or civil partner ;

his children and step children, his parents and step-parents, his brothers and sisters and his step-brothers and step-sisters; and

the spouse or civil partner of any person within sub-paragraph (b);

...

“ commodity ” means any goods of a fungible nature that are capable of being delivered, including metals and their ores and alloys, agricultural products, and energy such as electricity;

“ consumer hire agreement ” has the meaning given by article 60N;

“ contract of general insurance " means any contract falling within Part I of Schedule 1;

“ contract of insurance " means any contract of insurance which is a contract of long-term insurance or a contract of general insurance, and includes—

fidelity bonds, performance bonds, administration bonds, bail bonds, customs bonds or similar contracts of guarantee, where these are—

effected or carried out by a person not carrying on a banking business;

not effected merely incidentally to some other business carried on by the person effecting them; and

effected in return for the payment of one or more premiums;

tontines;

capital redemption contracts or pension fund management contracts, where these are effected or carried out by a person who—

does not carry on a banking business; and

otherwise carries on a regulated activity of the kind specified by article 10(1) or (2);

contracts to pay annuities on human life;

contracts of a kind referred to in Article 2(3)(b)(v) of the Solvency 2 Directive ; and

contracts relating to the length of human life that are regulated by or under any enactment relating to social security, in so far as they are effected or carried out at their own risk by undertakings with permission to effect or carry out contracts of long-term insurance as principals;

but does not include a funeral plan contract ...;

“ contract of long-term insurance " means any contract falling within Part II of Schedule 1;

“ contractually based investment " means—

rights under a qualifying contract of insurance;

any investment of the kind specified by any of articles 83, 84, 85 and 87; or

any investment of the kind specified by article 89 so far as relevant to an investment falling within (a) or (b);

“ credit agreement ” has the meaning given by article 60B;

“ credit agreement ”—

in relation to an agreement other than a green deal plan, has the meaning given by article 60B;

in relation to a green deal plan, has the meaning given by article 60LB;

...

“ deposit " has the meaning given by article 5 except where the definition given in article 60L applies ;

...

...

“ electronic money ” has the meaning given by regulation 2(1) of the Electronic Money Regulations 2011;

“ emission allowance auctioning regulation ” means Commission Regulation ( EU ) No 1031/2010 of 12 November 2010 on the timing, administration and other aspects of auctioning of greenhouse gas emission allowances pursuant to the emission allowance trading directive;

“ emission allowance trading directive ” means Directive 2003/87/ EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowances trading within the Community;

...

“ financial instrument ” means any instrument listed in Part 1 of Schedule 2 read with Part 2 of that Schedule ;

“ full-scope UK AIFM ” has the meaning given by regulation 2(1) of the Alternative Investment Fund Managers Regulations 2013;

“ funeral plan contract " has the meaning given by article 59;

“ green deal plan ” has the meaning given by section 1 of the Energy Act 2011;

“ greenhouse gas emissions allowances ” mean “allowances” as defined in Article 3(a) of the emission allowance trading directive or in article 4(1) of the trading scheme order ;

“ hire-purchase agreement ” has the meaning given by article 60L;

“ hirer ” is to be read with the definition of “consumer hire agreement” in article 60N;

...

“ home purchase provider ” has the meaning given by article 63F(3);

“ home purchaser ” has the meaning given by article 63F(3);

“ home State ”—

in relation to a qualifying credit institution, means the State in which the institution has been granted authorisation;

in relation to a legal person (other than a qualifying credit institution) that has a registered office under the person's national law, means the State in which that office is located;

in relation to any other person, means the State in which the person's head office is located;

“ instrument " includes any record whether or not in the form of a document;

“ investment firm ” means a person whose regular occupation or business is the provision or performance of investment services and activities on a professional basis, other than—

a person excluded by Schedule 3, read with ... Commission Delegated Regulation (EU) 2017/592 of 1 December 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards for the criteria to establish when an activity is considered to be ancillary to the main business;

a person whose home State is not the United Kingdom and who would be excluded by Schedule 3, read with ... Commission Delegated Regulation (EU) 2017/592, if the person's registered office (or head office, in the case of a person that is not a body corporate or a person that is a body corporate but has no registered office) was in the United Kingdom;

...

“ joint enterprise " means an enterprise into which two or more persons (“the participators") enter for commercial purposes related to a business or businesses (other than the business of engaging in a regulated activity) carried on by them; and, where a participator is a member of a group, each other member of the group is also to be regarded as a participator in the enterprise;

“ lender ”—

in relation to a credit agreement other than a regulated mortgage contract or , an article 36H agreement (within the meaning given by article 36H) or an agreement that is a green deal plan , has the meaning given by article 60L;

in relation to an article 36H agreement (within the meaning given by that article) other than a regulated mortgage contract, has the meaning given by article 36H ;

in relation to a credit agreement that is a green deal plan, has the meaning given by article 60LB;

“ local authority " means—

in England and Wales, a local authority within the meaning of the Local Government Act 1972 , the Greater London Authority, the Common Council of the City of London or the Council of the Isles of Scilly;

in Scotland, a local authority within the meaning of the Local Government (Scotland) Act 1973 ;

in Northern Ireland, a district council within the meaning of the Local Government Act (Northern Ireland) 1972 ;

“ management company ” has the meaning given by section 237(2) of the Act;

“ managing agent " means a person who is permitted by the Council of Lloyd’s in the conduct of his business as an underwriting agent to perform for a member of Lloyd’s one or more of the following functions—

underwriting contracts of insurance at Lloyd’s;

reinsuring such contracts in whole or in part;

paying claims on such contracts;

“ market operator ” means—

a person that manages or operates the business of a UK regulated market (including a person who does so as the UK regulated market itself), or

a person that would fall within paragraph (a) if the person had its registered office (or, if it does not have one, its head office) in the United Kingdom,

other than a person falling within paragraph (1A);

“ markets in financial instruments directive ” means Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments (recast);

“ markets in financial instruments regulation ” means Regulation ( EU ) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments as it forms part of assimilated law ;

“ multilateral trading facility ” or “ MTF ” means—

a UK multilateral trading facility (within the meaning of Article 2.1.14A of the markets in financial instruments regulation) operated by an investment firm, a qualifying credit institution or a market operator, or

a facility which—

is operated by an investment firm, qualifying credit institution or market operator whose home State is not the United Kingdom, and

if its operator's home State was the United Kingdom, would be a UK multilateral trading facility (within the meaning of Article 2.1.14A of the markets in financial instruments regulation);

“ occupational pension scheme ” has the meaning given by section 1 of the Pension Schemes Act 1993 but with paragraph (b) of the definition omitted;

“ operator ” has the same meaning as in the trading scheme order ;

“ organised trading facility ” or “ OTF ” means—

a UK organised trading facility (within the meaning of Article 2.1.15A of the markets in financial instruments regulation) operated by an investment firm, a qualifying credit institution or a market operator, or

a facility which—

is operated by an investment firm, qualifying credit institution or market operator whose home State is not the United Kingdom, and

if its operator's home State was the United Kingdom, would be a UK organised trading facility (within the meaning of Article 2.1.15A of the markets in financial instruments regulation);

“ overseas person " means a person who—

carries on activities of the kind specified by any of articles 14, 21, 25, 25A, 25B, 25C, 25D, 25DA, 25E, 37 , 39A 40, 45, 51ZA, 51ZB, 51ZC, 51ZD, 51ZE , 52 , 53, 53A , 53B, 53C, 53D, 55A, 61, 63B , 63F, 63J and 63U or, so far as relevant to any of those articles, article 64 (or activities of a kind which would be so specified but for the exclusion in article 72); but

does not carry on any such activities, or offer to do so, from a permanent place of business maintained by him in the United Kingdom;

“ owner ”, in relation to a hire purchase agreement, has the meaning given by article 60N;

“ pension fund management contract " means a contract to manage the investments of pension funds (other than funds solely for the benefit of the officers or employees of the person effecting or carrying out the contract and their dependants or, in the case of a company, partly for the benefit of officers and employees and their dependants of its subsidiary or holding company or a subsidiary of its holding company); and for the purposes of this definition, “subsidiary" and “holding company" are to be construed in accordance with section 1159 of the Companies Act 2006 ;

“ the person’s firm ”, in relation to a person acting as an insolvency practitioner or in reasonable contemplation of that person’s appointment as an insolvency practitioner, means—

the person’s employer;

where the person is a partner in a partnership other than a limited liability partnership, that partnership;

where the person is a member of a limited liability partnership, that partnership;

“ personal pension scheme ” means a scheme or arrangement which is not an occupational pension scheme or a stakeholder pension scheme and which is comprised in one or more instruments or agreements, having or capable of having effect so as to provide benefits to or in respect of people—

on retirement,

on having reached a particular age, or

on termination of service in an employment;

“ plan provider ” has the meaning given by paragraph (3) of article 63B, read with paragraphs (7) and (8) of that article;

“ portfolio management ” means managing portfolios in accordance with mandates given by clients on a discretionary client-by-client basis where such portfolios include one or more financial instruments;

“ property " includes currency of the United Kingdom or any other country or territory;

“ qualifying contract of insurance " means a contract of long-term insurance which is not—

a reinsurance contract; nor

a contract in respect of which the following conditions are met—

the benefits under the contract are payable only on death or in respect of incapacity due to injury, sickness or infirmity;

...

the contract has no surrender value, or the consideration consists of a single premium and the surrender value does not exceed that premium; and

the contract makes no provision for its conversion or extension in a manner which would result in it ceasing to comply with any of the above conditions;

“ qualifying credit institution ” means a credit institution which—

is a person who—

has Part 4A permission to carry on the regulated activity of accepting deposits, or

satisfies the conditions for being given permission under Part 4A to carry on that activity, or

is a body corporate incorporated in the United Kingdom and would satisfy those conditions—

were its head office in the United Kingdom, or

if it has a registered office, were its registered office, or its registered office and its head office, in the United Kingdom,

is not a friendly society,

is not a society registered as a credit union under—

i)the Co-operative and Community Benefit Societies Act 2014 ,

the Credit Unions (Northern Ireland) Order 1985 , or

the Co-operative and Community Benefit Societies Act (Northern Ireland) 1969 , and

is not a person excluded from the definition of “investment firm” by Schedule 3, read with ... Commission Delegated Regulation (EU) 2017/592 of 1 December 2016 supplementing Directive 2014/65/EU of the European Parliament and the Council with regard to regulatory technical standards for the criteria to establish when an activity is considered to be ancillary to the main business;

“ qualifying cryptoasset ” has the meaning given by article 88F (qualifying cryptoassets);

“ qualifying cryptoasset trading platform ” means a system in which multiple third-party buying and selling trading interests in qualifying cryptoassets are able to interact within the system and which brings together multiple third-party buying and selling interests in qualifying cryptoassets in a way that results in a contract for the exchange of qualifying cryptoassets for—

money, including electronic money, or

other qualifying cryptoassets;

“ qualifying stablecoin ” has the meaning given by article 88G (qualifying stablecoin);

“ reception ”, “ transmission ” and “ submission ” have the same meaning in relation to a bid at an auction for an investment of the kind specified in article 82A as in the emission allowance auctioning regulation or the UK auctioning regulations ;

“ regulated consumer hire agreement ” has the meaning given by article 60N;

“ regulated credit agreement ” has the meaning given by article 60B;

“ regulated home purchase plan ” has the meaning given by article 63F(3);

“ regulated home reversion plan ” has the meaning given by article 63B(3);

“ regulated mortgage contract " has the meaning given by article 61(3);

“ regulated sale and rent back agreement ” has the meaning given by article 63J(3);

“ relevant investment ” means—

rights under a qualifying contract of insurance;

rights under any other contract of insurance;

any investment of the kind specified by any of articles 83, 84, 85 and 87; or

any investment of the kind specified by article 89 so far as relevant to an investment falling within (a) or (c);

“ relevant recipient of credit ” has the meaning given by article 60L;

“ relevant specified investment cryptoasset ” has the meaning given by article 9N(5)(b);

“ restricted-use credit agreement ” has the meaning given in article 60L;

“ reversion seller ” has the meaning given by article 63B(3);

“ securitisation repository ” means a person registered with the FCA under regulation 17 of the Securitisation Regulations 2024 ;

“ security " means (except where the context otherwise requires) any investment of the kind specified by any of articles 76 to 82 or by article 82B or, so far as relevant to any such investment, article 89;

“ selling ", in relation to any investment, includes disposing of the investment for valuable consideration, and for these purposes “disposing" includes—

in the case of an investment consisting of rights under a contract—

surrendering, assigning or converting those rights; or

assuming the corresponding liabilities under the contract;

in the case of an investment consisting of rights under other arrangements, assuming the corresponding liabilities under the arrangements; and

in the case of any other investment, issuing or creating the investment or granting the rights or interests of which it consists;

“ small registered UK AIFM ” has the meaning given by regulation 2(1) of the Alternative Investment Fund Managers Regulations 2013;

“ specified investment cryptoasset ” means a cryptoasset that—

is a specified investment as a result of Part 3 (specified investments)—

excluding article 88F (qualifying cryptoassets), and

including where the cryptoasset is a right to or an interest in such a specified investment by operation of article 89 (rights to or interests in investments), and

would be a qualifying cryptoasset if sub-paragraphs (a) to (c) of article 88F(4) were disregarded;

“ stakeholder pension scheme " has the meaning given by section 1 of the Welfare Reform and Pensions Act 1999 in relation to Great Britain and has the meaning given by article 3 of the Welfare Reform and Pensions (Northern Ireland) Order 1999 in relation to Northern Ireland ;

“ structured deposit ” means a deposit which is fully repayable at maturity on terms under which interest or a premium will be paid or is at risk, according to a formula involving factors such as—

an index or combination of indices, excluding variable rate deposits whose return is directly linked to an interest rate index such as Euribor or Libor;

a financial instrument or combination of financial instruments;

a commodity or combination of commodities or other physical or non-physical non-fungible assets; or

a foreign exchange rate or combination of foreign exchange rates;

“ syndicate " means one or more persons, to whom a particular syndicate number has been assigned by or under the authority of the Council of Lloyd’s, carrying out or effecting contracts of insurance written at Lloyd’s;

“ trade repository ” means—

a person registered with the FCA under Article 55 of Regulation (EU) 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories or a person recognised by the FCA under Article 77 of that Regulation; or

a person registered with the FCA under Article 5 of the SFT regulation or a person recognised by the FCA under Article 19 of that Regulation;

“ trading scheme order ” means the Greenhouse Gas Emissions Trading Scheme Order 2020;

“ UK auctioning regulations ” means the Greenhouse Gas Emissions Trading Scheme Auctioning Regulations 2021;

“ UK regulated market ” has the meaning given by Article 2.1.13A of the markets in financial instruments regulation;

“ UK UCITS ” has the meaning given by section 237(3) of the Act;

...

...

“ voting shares ", in relation to a body corporate, means shares carrying voting rights attributable to share capital which are exercisable in all circumstances at any general meeting of that body corporate.

(1A) A person falls within this paragraph if—

(a) the person is excluded from the definition of “investment firm” by Schedule 3, read with ... Commission Delegated Regulation (EU) 2017/592 of 1 December 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards for the criteria to establish when an activity is considered to be ancillary to the main business, or

(b) the person is one whose home State is not the United Kingdom and who would be excluded from that definition by Schedule 3, read with ... Commission Delegated Regulation (EU) 2017/592, if the person had its registered office (or, if it does not have one, its head office) in the United Kingdom.

(2) For the purposes of this Order, a transaction is entered into through a person if he enters into it as agent or arranges, in a manner constituting the carrying on of an activity of the kind specified by article 25(1) , 25A(1), 25B(1) , 25C(1) or 25E(1) , for it to be entered into by another person as agent or principal.

(3) For the purposes of this Order, a contract of insurance is to be treated as falling within Part II of Schedule 1, notwithstanding the fact that it contains related and subsidiary provisions such that it might also be regarded as falling within Part I of that Schedule, if its principal object is that of a contract falling within Part II and it is effected or carried out by an authorised person who has permission to effect or carry out contracts falling within paragraph I of Part II of Schedule 1.

(4) In this Order any reference to a sourcebook is to a sourcebook in the Handbook of Rules and Guidance published by the FCA containing rules made by the FCA under the Act, as the sourcebook has effect on IP completion day.

Section 4 Specified activities: general

(1) The following provisions of this Part specify kinds of activity for the purposes of section 22(1) of the Act (and accordingly any activity of one of those kinds, which is carried on by way of business , and relates to an investment of a kind specified by any provision of Part III and applicable to that activity, is a regulated activity for the purposes of the Act).

(2) The kinds of activity specified by articles 51ZA, 51ZB, 51ZC, 51ZD, 51ZE , 52 and 63N are also specified for the purposes of section 22(1)(b) of the Act (and accordingly any activity of one of those kinds, when carried on by way of business, is a regulated activity when carried on in relation to property of any kind).

(2A) The kinds of activity specified by Part 3A are specified for the purposes of section 22(1A)(a) of the Act (and accordingly any activity of one of those kinds, when carried on by way of business, is a regulated activity).

(2B) The kinds of activity specified in Part 3B are specified for the purposes of section 22(1B) of the Act (and accordingly any activity of one of those kinds, when carried on by way of business in Great Britain, is a regulated activity).

(3) Subject to paragraph (4), each provision specifying a kind of activity is subject to the exclusions applicable to that provision (and accordingly any reference in this Order to an activity of the kind specified by a particular provision is to be read subject to any such exclusions).

(4) Where an investment firm or qualifying credit institution —

(a) provides or performs investment services and activities on a professional basis, and

(b) in doing so would be treated as carrying on an activity of a kind specified by a provision of this Part but for an exclusion in any of articles 15, 16, 18, 19, 22, 23, 29, 34, 38, 67, 68, 69, 70 and 72E,

that exclusion is to be disregarded and, accordingly, the investment firm or qualifying credit institution is to be treated as carrying on an activity of the kind specified by the provision in question.

(4A) Where a person ...—

(a) for remuneration, takes up or pursues insurance distribution, or reinsurance distribution, in relation to a risk or commitment located in the United Kingdom , and

(b) in doing so would be treated as carrying on an activity of a specified kind by a provision of this Part but for an exclusion in any of articles 30, 66, 67 and 72AA,

that exclusion is to be disregarded (and accordingly that person is to be treated as carrying on an activity of the kind specified by the provision in question).

(4AA) In its application to any activity relating to a contract of insurance entered into before IP completion day, paragraph (4A)(a) has effect as if “or an EEA State” were inserted after “the United Kingdom.

(4B) Where—

(a) a person is a mortgage creditor or a mortgage intermediary; and

(b) in acting as a mortgage creditor or a mortgage intermediary in respect of an agreement entered into, or to be entered into, on or after 21st March 2016 , that person would be treated as carrying on an activity of a kind specified by article 25A (arranging regulated mortgage contracts), 36A (credit broking), 53A (advising on regulated mortgage contracts), 53DA (advising on regulated credit agreements for the acquisition of land), 60B (regulated credit agreements) or 61 (entering into and administering regulated mortgage contracts), but for an exclusion or exemption provided for by this Order,

that exclusion or exemption is to be disregarded (and accordingly that person is to be treated as carrying on an activity of the kind specified by the provision in question) to the extent that such exclusion or exemption neither relates to an agreement to which section 423A(3) of the Act applies nor falls within the scope of any of the derogations set out in Article 3(3) of the mortgages directive (as it had effect immediately before IP completion day) .

(5) In this article—

...

“ insurance distribution ” means any regulated activity of the kind specified by article 21, 25(1) or (2), 39A, 53, 55A, or, so far as relevant to any of those articles, article 64, which is carried on in relation to a contract of insurance;

“ reinsurance distribution ” means any regulated activity of the kind specified by article 21, 25(1) or (2), 39A, 53, 55A, or, so far as relevant to any of those articles, article 64, which is carried on in relation to a reinsurance contract.

Section 5 Accepting deposits

(1) Accepting deposits is a specified kind of activity if—

(a) money received by way of deposit is lent to others; or

(b) any other activity of the person accepting the deposit is financed wholly, or to a material extent, out of the capital of or interest on money received by way of deposit.

(2) In paragraph (1), “deposit" means a sum of money, other than one excluded by any of articles 6 to 9A 9AZA , paid on terms—

(a) under which it will be repaid, with or without interest or premium, and either on demand or at a time or in circumstances agreed by or on behalf of the person making the payment and the person receiving it; and

(b) which are not referable to the provision of property (other than currency) or services or the giving of security.

(3) For the purposes of paragraph (2), money is paid on terms which are referable to the provision of property or services or the giving of security if, and only if—

(a) it is paid by way of advance or part payment under a contract for the sale, hire or other provision of property or services, and is repayable only in the event that the property or services is or are not in fact sold, hired or otherwise provided;

(b) it is paid by way of security for the performance of a contract or by way of security in respect of loss which may result from the non-performance of a contract; or

(c) without prejudice to sub-paragraph (b), it is paid by way of security for the delivery up or return of any property, whether in a particular state of repair or otherwise.

Section 6 Sums paid by certain persons

(1) A sum is not a deposit for the purposes of article 5 if it is—

(a) paid by any of the following persons—

(i) the Bank of England ...;

(ii) an authorised person who has permission to accept deposits, or to effect or carry out contracts of insurance;

(iii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(iv) National Savings and Investments;

(v) a municipal bank, that is to say a company which was, immediately before the coming into force of this article, exempt from the prohibition in section 3 of the Banking Act 1987 by virtue of section 4(1) of, and paragraph 4 of Schedule 2 to, that Act;

(vi) Keesler Federal Credit Union;

(vii) a body of persons certified as a school bank by the National Savings Bank or by an authorised person who has permission to accept deposits;

(viii) a local authority;

(xi) any body which by virtue of any enactment has power to issue a precept to a local authority in England and Wales or a requisition to a local authority in Scotland, or to the expenses of which, by virtue of any enactment, a local authority in the United Kingdom is or can be required to contribute (and in this paragraph, “enactment" includes an enactment comprised in, or in an instrument made under, an Act of the Scottish Parliament);

(x) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(xi) the European Investment Bank;

(xii) the International Bank for Reconstruction and Development;

(xiii) the International Finance Corporation;

(xiv) the International Monetary Fund;

(xv) the African Development Bank;

(xvi) the Asian Development Bank;

(xvii) the Caribbean Development Bank;

(xviii) the Inter-American Development Bank;

(xix) the European Bank for Reconstruction and Development;

(xx) the Council of Europe Development Bank;

(b) paid by a person other than one mentioned in sub-paragraph (a) in the course of carrying on a business consisting wholly or to a significant extent of lending money;

(c) paid by one company to another at a time when both are members of the same group or when the same individual is a majority shareholder controller of both of them; or

(d) paid by a person who, at the time when it is paid, is a close relative of the person receiving it or who is, or is a close relative of, a director or manager of that person or who is, or is a close relative of, a controller of that person.

(2) For the purposes of paragraph (1)(c), an individual is a majority shareholder controller of a company if he is a controller of the company by virtue of paragraph (a), (c), (e) or (g) of section 422(2) of the Act, and if in his case the greatest percentage of those referred to in those paragraphs is 50 or more.

(3) In the application of sub-paragraph (d) of paragraph (1) to a sum paid by a partnership, that sub-paragraph is to have effect as if, for the reference to the person paying the sum, there were substituted a reference to each of the partners.

Section 7 Sums received by solicitors etc.

(1) A sum is not a deposit for the purposes of article 5 if it is received by a practising solicitor acting in the course of his profession.

(2) In paragraph (1), “practising solicitor" means—

(a) a solicitor who is qualified to act as such under section 1 of the Solicitors Act 1974 , article 4 of the Solicitors (Northern Ireland) Order 1976 or section 4 of the Solicitors (Scotland) Act 1980 ;

(b) a recognised body;

(c) a registered foreign lawyer in the course of providing professional services as a member of a multi-national partnership; or

(d) a Swiss lawyer who is a registered European lawyer ; ...

(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) In this article—

(a) “a recognised body" means a body corporate recognised by—

(i) the Council of the Law Society under section 9 of the Administration of Justice Act 1985 ;

(ii) the Incorporated Law Society of Northern Ireland under article 26A of the Solicitors (Northern Ireland) Order 1976 ; or

(iii) the Council of the Law Society of Scotland under section 34 of the Solicitors (Scotland) Act 1980;

(b) “registered foreign lawyer" has the meaning given by section 89 of the Courts and Legal Services Act 1990 or, in Scotland, section 65 of the Solicitors (Scotland) Act 1980 ;

(c) “multi-national partnership" has the meaning given by section 89 of the Courts and Legal Services Act 1990 but, in Scotland, is a reference to a “multi-national practice" within the meaning of section 60A of the Solicitors (Scotland) Act 1980 “registered European lawyer" has the meaning given by regulation 2(1) of the European Communities (Lawyer’s Practice) Regulations 2000 or regulation 2(1) of the European Communities (Lawyer’s Practice) (Scotland) Regulation 2000 ; ...

(d) “registered European lawyer” has the meaning given by regulation 2(1) of the European Communities (Lawyer’s Practice) Regulations 2000 or regulation 2(1) of the European Communities (Lawyer’s Practice) (Scotland) Regulation 2000 ; and

(e) “Swiss lawyer” means a national of the United Kingdom or a Swiss national who—

(i) immediately before IP completion day was authorised in Switzerland to pursue professional activities under the professional title of Avocat, Advokat, Rechtsanwalt, Anwalt, Fürsprecher, Fürsprech or Avvocato, or

(ii) had started training towards but not yet obtained their professional qualifications before IP completion day in order to be authorised in Switzerland to pursue professional activities under one of the professional titles referred to in paragraph (i) but who completed their qualifications and were so authorised before the end of the period of four years beginning with IP completion day.

Section 8 Sums received by persons authorised to deal etc.

A sum is not a deposit for the purposes of article 5 if it is received by a person who is—

(a) an authorised person with permission to carry on an activity of the kind specified by any of articles 14, 21, 25, 37, 51ZA, 51ZB, 51ZC, 51ZD, 51ZE and 52, or

(b) an exempt person in relation to any such activity,

in the course of, or for the purpose of, carrying on any such activity (or any activity which would be such an activity but for any exclusion made by this Part) with or on behalf of the person by or on behalf of whom the sum is paid.

Section 9 Sums received in consideration for the issue of debt securities

(1) Subject to paragraph (2), a sum is not a deposit for the purposes of article 5 if it is received by a person as consideration for the issue by him of any investment of the kind specified by article 77 or 78.

(2) The exclusion in paragraph (1) does not apply to the receipt by a person of a sum as consideration for the issue by him of commercial paper unless—

(a) the commercial paper is issued to persons—

(i) whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses; or

(ii) who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses; and

(b) the redemption value of the commercial paper is not less than £100,000 (or an amount of equivalent value denominated wholly or partly in a currency other than sterling), and no part of the commercial paper may be transferred unless the redemption value of that part is not less than £100,000 (or such an equivalent amount).

(3) In paragraph (2), “commercial paper” means an investment of the kind specified by article 77 or 78 having a maturity of less than one year from the date of issue.

Section 9A Sums received in exchange for electronic money

A sum is not a deposit for the purposes of article 5 if it is immediately exchanged for electronic money.

Section 9B Issuing electronic money

Issuing electronic money by—

(a) a qualifying credit institution , a credit union or a municipal bank; or

(b) a person who is deemed to have been granted authorisation under regulation 74 of the Electronic Money Regulations 2011 or who falls within regulation 76(1) of those Regulations,

is a specified kind of activity.

Section 9C Persons certified as small issuers etc.

(1) There is excluded from article 9B the issuing of electronic money by a person to whom the FCA has given a certificate under this article (provided the certificate has not been revoked).

(2) An application for a certificate may be made by—

(a) a body corporate, or

(b) a partnership,

other than a credit institution ... which has its head office in the United Kingdom.

(3) The FCA must, on the application of such a person (“A”), give A a certificate if it appears to the FCA that paragraph (4), (5) or (6) applies.

(4) This paragraph applies if—

(a) A does not issue electronic money except on terms that the electronic device on which the monetary value is stored is subject to a maximum storage amount of not more than 150 euro; and

(b) A’s total liabilities with respect to the issuing of electronic money do not (or will not) usually exceed 5 million euro and do not (or will not) ever exceed 6 million euro.

(5) This paragraph applies if—

(a) the condition in paragraph (4)(a) is met;

(b) A’s total liabilities with respect to the issuing of electronic money do not (or will not) exceed 10 million euro; and

(c) electronic money issued by A is accepted as a means of payment only by—

(i) subsidiaries of A which perform operational or other ancillary functions related to electronic money issued or distributed by A; or

(ii) other members of the same group as A (other than subsidiaries of A).

(6) This paragraph applies if—

(a) the conditions in paragraphs (4)(a) and (5)(b) are met; and

(b) electronic money issued by A is accepted as a means of payment, in the course of business, by not more than one hundred persons where—

(i) those persons accept such electronic money only at locations within the same premises or limited local area; or

(ii) those persons have a close financial or business relationship with A, such as a common marketing or distribution scheme.

(7) For the purposes of paragraph (6)(b)(i), locations are to be treated as situated within the same premises or limited local area if they are situated within—

(a) a shopping centre, airport, railway station, bus station, or campus of a university, polytechnic, college, school or similar educational establishment; or

(b) an area which does not exceed four square kilometres;

but sub-paragraphs (a) and (b) are illustrative only and are not to be treated as limiting the scope of paragraph (6)(b)(i).

(8) For the purposes of paragraph (6)(b)(ii), persons are not to be treated as having a close financial or business relationship with A merely because they participate in arrangements for the acceptance of electronic money issued by A.

(9) In this article, references to amounts in euro include references to equivalent amounts in sterling.

(10) A person to whom a certificate has been given under this article (and whose certificate has not been revoked) is referred to in this Chapter as a “certified person”.

Section 9D Applications for certificates

The following provisions of the Act apply to applications to the FCA for certificates under 9C (and the determination of such applications) as they apply to applications for Part IV permissions (and the determination of such applications)—

(a) section 55U(1)(b) and (4) to (8);

(b) section 55V;

(c) section 55X(2) and (4)(f); and

(d) section 55Z3(1).

Section 9E Revocation of certificate on FCA ’s own initiative

(1) The FCA may revoke a certificate given to a person (“A”) under article 9C if—

(a) it appears to it that A does not meet the relevant conditions, or has failed to meet the relevant conditions at any time since the certificate was given; or

(b) the person to whom the certificate was given has contravened any rule or requirement to which he is subject as a result of article 9G.

(2) For the purposes of paragraph (1), A meets the relevant conditions at any time if, at that time, paragraph (4), (5) or (6) of article 9C applies.

(3) Sections 55Z and 55Z3(2) of the Act apply to the revocation of a certificate under paragraph (1) as they apply to the cancellation of a Part IV permission on the FCA ’s own initiative, as if references in those sections to an authorised person were references to a certified person.

Section 9F Revocation of certificate on request

(1) A certified person (“B”) may apply to the FCA for his certificate to be revoked, and the FCA must then revoke the certificate and give B written notice that it has done so.

(2) An application under paragraph (1) must be made in such manner as the FCA may direct.

(3) If—

(a) B has made an application under Part IV of the Act for permission to carry on a regulated activity of the kind specified by article 9B (or for variation of an existing permission so as to add a regulated activity of that kind), and

(b) on making an application for revocation of his certificate under paragraph (1), he requests that the revocation be conditional on the granting of his application under Part IV of the Act,

the revocation of B’s certificate is to be conditional on the granting of his application under Part IV of the Act.

Section 9G Obtaining information from certified persons etc.

(1) The FCA may make rules requiring certified persons to provide information to the FCA about their activities so far as relating to the issuing of electronic money, including the amount of their liabilities with respect to the issuing of electronic money.

(2) Section 138A of the Act (modification or waiver of rules) applies in relation to rules made under paragraph (1) as if references in that section to an authorised person were references to a certified person.

(3) Section 138D of the Act (actions for damages) applies in relation to a rule made under paragraph (1) as if the reference in subsection (1) of that section to an authorised person were a reference to a certified person.

(4) The FCA may, by notice in writing given to a certified person, require him—

(a) to provide specified information or information of a specified description; or

(b) to produce specified documents or documents of a specified description.

(5) Paragraph (4) applies only to information or documents reasonably required for the purposes of determining whether the certified person meets, or has met, the relevant conditions.

(6) Subsections (2), (5) and (6) of section 165 of the Act ( Regulator’s power to require information) apply to a requirement imposed under paragraph (4) as they apply to a requirement imposed under that section.

(7) Section 166 of the Act (reports by skilled persons) has effect as if—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) the reference in section 166(2)(a) of the Act to an authorised person included a reference to a certified person.

(8) Subsection (4) of section 168 of the Act (appointment of persons to carry out investigations in particular cases) has effect as if it provided for subsection (5) of that section to apply if it appears to the FCA that there are circumstances suggesting that a certified person may not meet, or may not have met, the relevant conditions.

(9) Sections 175 (information and documents: supplemental provisions), 176 (entry of premises under warrant) and 177 (offences) of the Act apply to a requirement imposed under paragraph (4) as they apply to a requirement imposed under section 165 of the Act (the reference in section 176(3)(a) to an authorised person being read as a reference to a certified person).

(10) In this article—

(a) “specified”, in paragraph (4), means specified in the notice mentioned in that paragraph;

(b) a certified person (“A”) meets the relevant conditions at any time if, at that time, paragraph (4), (5) or (6) of article 9C applies.

Section 9H Rules prohibiting the issue of electronic money at a discount

(1) The FCA may make rules applying to authorised persons with permission to carry on an activity of the kind specified by article 9B, prohibiting the issue of electronic money having a monetary value greater than the funds received.

(2) Section 138A of the Act (modification or waiver of rules) applies in relation to rules made under paragraph (1).

Section 9I False claims to be a certified person

A person who is not a certified person is to be treated as guilty of an offence under section 24 of the Act (false claims to be authorised or exempt) if he—

(a) describes himself (in whatever terms) as a certified person;

(b) behaves, or otherwise holds himself out, in a manner which indicates (or which is reasonably likely to be understood as indicating) that he is a certified person.

Section 9J Exclusion of electronic money from the compensation scheme

The compensation scheme established under Part XV of the Act is not to provide for the compensation of persons in respect of claims made in connection with any activity of the kind specified by article 9B.

Section 9K Record of certified persons

The record maintained by the FCA under section 347 of the Act (public record of authorised persons etc.) must include every certified person.

Section 9L Funds received for payment services

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 9M Issuing qualifying stablecoin

(1) Issuing a qualifying stablecoin is a specified kind of activity.

(2) A person (“ A ”) “issues” a qualifying stablecoin if—

(a) A offers, or arranges for another to offer, a qualifying stablecoin for sale or subscription from an establishment in the United Kingdom, or has previously done so, whether before or on or after the coming into force of this article,

(b) the qualifying stablecoin was created by, or on behalf of, A or a member of A’s group, and

(c) A carries on both the following activities from an establishment in the United Kingdom—

(i) undertaking, or arranging for another to undertake, to redeem the qualifying stablecoin;

(ii) holding, or arranging for another to hold, fiat currency or other assets for the purpose of maintaining the stable value of the qualifying stablecoin, as mentioned in article 88G(2)(a).

(3) The activity in paragraph (2)(a) does not include the minting of a qualifying stablecoin, such that it first exists—

(a) as an identifiable asset on the blockchain, and

(b) in a transferable form.

(4) For the purposes of paragraph (1)—

(a) A is to be considered as carrying on or having carried on the activity in paragraph (2)(a) where A accepts an invitation from another person (“ B ”) for B’s purchase of a qualifying stablecoin;

(b) A is to be considered as carrying on the activities in paragraphs (2)(a) and (2)(c)(ii), and as having created the qualifying stablecoin for the purposes of paragraph (2)(b), where A has assumed (by assignment, variation, operation of law or by any other similar mechanism) an undertaking to redeem the qualifying stablecoin;

(c) where all of the activities in paragraph (2)(a) and (c)(i) and (ii) are carried on by another person (“ B ”) under arrangements made by A, then only A is to be considered as carrying on the activity specified in paragraph (1), not B.

Section 9N Safeguarding of qualifying cryptoassets and relevant specified investment cryptoassets

(1) The following are specified kinds of activity—

(a) the safeguarding of a qualifying cryptoasset or a relevant specified investment cryptoasset (“the cryptoasset”) on behalf of another person (“ A ”);

(b) arranging for a person to carry on that activity.

(2) For the purposes of paragraph (1)(a)—

(a) a person (“ C ”) is to be regarded as safeguarding the cryptoasset if C has control of the cryptoasset through any means that would enable C to bring about a transfer of the benefit of the cryptoasset to another person, including C;

(b) “ on behalf of another ” includes where that other person, A, has—

(i) both legal and beneficial title to the cryptoasset;

(ii) the beneficial title only to the cryptoasset;

(iii) subject to sub-paragraph (c), a right against C for the return of the cryptoasset;

(c) subject to sub-paragraph (d), sub-paragraph (b)(iii) does not apply where A’s right against C for the cryptoasset arises in the following circumstances—

(i) C received the cryptoasset from A under a title transfer cryptoasset collateral arrangement, or

(ii) C acquired the cryptoasset from A under an agreement, pursuant to which A contracted to buy back the cryptoasset from C;

(d) sub-paragraph (c) does not apply where A is—

(i) a consumer, or

(ii) specified, or of a description specified, in rules made by the FCA.

(3) Rules made by virtue of paragraph (2)(d)(ii) may—

(a) specify a particular person or class of persons;

(b) be limited so as to apply only to agreements or arrangements, or classes of agreements or arrangements, specified by the rules.

(4) For the purposes of paragraph (2)(a), the means by which C may have control of the cryptoasset include—

(a) holding or storing of the means of access, or part of the means of access, to the cryptoasset;

(b) appointing a person to hold or store the means of access, or part of the means of access, to the cryptoasset under an arrangement operated by C.

(5) For the purposes of this article—

(a) “ consumer ” means an individual who is acting for a purpose other than for any trade, business or profession carried on by that individual;

(b) “ relevant specified investment cryptoasset ” means a specified investment cryptoasset that is a—

(i) security, or

(ii) contractually based investment;

(c) “ title transfer cryptoasset collateral arrangement ” means an agreement or arrangement between C and the person who would otherwise be regarded as safeguarding the cryptoasset on behalf of another person (“ A ”), where—

(i) the purpose of the agreement or arrangement with A is to secure or otherwise guarantee financial obligations owed by A to C, and

(ii) A transfers legal and beneficial ownership of the cryptoasset to C on terms that C must transfer legal and beneficial ownership of the cryptoasset or its equivalent to A when the financial obligations referred to in paragraph (i) are discharged;

(d) references to the cryptoasset, a qualifying cryptoasset or a relevant specified investment cryptoasset include the means of access to that cryptoasset;

(e) references to the “ means of access ” to a cryptoasset include a private cryptographic key to that cryptoasset.

Section 9O Article 9N exclusion: group activity

(1) There are excluded from article 9N(1)(a) activities which a person (“ P ”) carries on pursuant to arrangements—

(a) which are operated by an authorised cryptoasset custodian (“ C ”), who is connected with P, in the course of carrying on the activity in article 9N(1)(a), and

(b) under which C undertakes to the person on whose behalf the qualifying cryptoasset or relevant specified investment cryptoasset is being safeguarded a responsibility in respect of that cryptoasset which is no less onerous than C would have undertaken if C were safeguarding the cryptoasset.

(2) For the purposes of paragraph (1), an authorised cryptoasset custodian is connected with a person if they are a member of the same group as that person.

Section 9P Article 9N exclusion:introductions

(1) There are excluded from article 9N(1)(b) arrangements pursuant to which introductions are made by a person (“ P ”) to an authorised cryptoasset custodian (“ C ”), with a view to C providing in the United Kingdom a service comprising an activity of the kind specified by article 9N(1)(a), provided that—

(a) C is not connected with P, and

(b) P is not remunerated by C.

(2) For the purposes of paragraph (1), an authorised cryptoasset custodian is connected with a person if they are a member of the same group as that person.

Section 9Q Article 9N exclusion: temporary settlement arrangements

There are excluded from article 9N(1) arrangements whereby a qualifying cryptoasset or a relevant specified investment cryptoasset is held temporarily to facilitate the settlement of a transaction.

Section 9R Article 9N exclusion: other exclusions

(1) A person (“ P ”) does not carry on the activity specified by article 9N(1)(a) on behalf of another person (“ A ”), if A appoints P as their agent for the purposes of giving instructions to a third person (“ C ”), where C has undertaken directly to A to safeguard that cryptoasset.

(2) A person (“ P ”) does not carry on the activity specified by article 9N(1)(a) on behalf of another person (“ A ”) unless P holds itself out as engaging in the business of providing a service in relation to a qualifying cryptoasset or a relevant specified investment cryptoasset to A, or to a person acting on behalf of A.

(3) There is excluded from article 9N(1) any activity where the qualifying cryptoasset in question is, or is to be, safeguarded by a person (“ A ”), or a member of the same group as A, for the purpose of enabling or facilitating transactions by A, or a member of the same group as A, that would be within article 9T (dealing in qualifying cryptoassets as principal) but for the operation of article 9V(1)(e).

Section 9S Operating a qualifying cryptoasset trading platform

The operation of a qualifying cryptoasset trading platform is a specified kind of activity.

Section 9T Dealing in qualifying cryptoassets as principal

Buying, selling, subscribing for or underwriting a qualifying cryptoasset as principal is a specified kind of activity.

Section 9U Article 9T exclusion:absence of holding out etc.

(1) Subject to paragraph (3), a person (“ P ”) does not carry on an activity specified by article 9T by entering into a transaction which relates to a qualifying cryptoasset unless—

(a) P holds itself out as willing, as principal, to buy, sell, subscribe for or underwrite qualifying cryptoassets of the kind to which the transaction relates at prices determined by P—

(i) generally, and

(ii) continuously rather than in respect of each particular transaction,

(b) P holds itself out as engaging in the business of buying qualifying cryptoassets of the kind to which the transaction relates, with a view to selling them,

(c) P holds itself out as engaging in the business of underwriting qualifying cryptoassets of the kind to which the transaction relates, or

(d) P regularly solicits members of the public with the purpose of inducing them, as principals or agents, to enter into transactions constituting activities of the kind specified by article 9T, and the transaction is entered into as a result of P having solicited members of the public in that manner.

(2) In paragraph (1)(d), “ members of the public ” means persons other than—

(a) an authorised person with a Part 4A permission to carry on a regulated activity specified by article 9T;

(b) a member of the same group as P.

(3) Paragraph (1) does not apply where P enters into the transaction as bare trustee or, in Scotland, as nominee for another person (“ B ”), where—

(a) P is acting on B’s instructions, and

(b) P holds itself out as providing a service of buying and selling qualifying cryptoassets.

Section 9V Article 9T exclusion: other exclusions

(1) There are excluded from article 9T—

(a) the creation, including the design, of a qualifying stablecoin;

(b) the minting of a qualifying stablecoin, such that it first exists as—

(i) an identifiable asset on a blockchain, and

(ii) in a transferable form;

(c) activity where the qualifying cryptoasset is acquired or transferred for no consideration;

(d) the distribution of a qualifying cryptoasset that was automatically created as a reward for the maintenance of the distributed ledger or the validation of transactions;

(e) activity where the qualifying cryptoasset is—

(i) issued by, or on behalf of, the person carrying on the activity, and

(ii) sold to or subscribed for by an employee or partner of the person carrying on the activity;

(f) the private sale or transfer by a person (“ A ”) of a qualifying cryptoasset—

(i) created and minted by, or on behalf of, A, and

(ii) having as its sole purpose the raising of capital by A;

(g) any activity by a person who only enters into transactions as principal with other members of the same group.

(2) There is excluded from article 9T any activity specified by—

(a) article 9M (issuing qualifying stablecoin);

(b) article 9S (operating a qualifying cryptoasset trading platform);

(c) article 9Z6 (qualifying cryptoasset staking).

Section 9W Dealing in qualifying cryptoassets as agent

Buying, selling, or subscribing for or underwriting a qualifying cryptoasset as agent is a specified kind of activity.

Section 9X Article 9W: exclusions

(1) There is excluded from article 9W—

(a) the creation, including the design, of a qualifying stablecoin;

(b) the minting of a qualifying stablecoin, such that it first exists as—

(i) an identifiable asset on a blockchain, and

(ii) in a transferable form;

(c) activity where the qualifying cryptoasset is acquired or transferred for no consideration;

(d) the distribution of a qualifying cryptoasset that was automatically created as a reward for the maintenance of the distributed ledger or the validation of transactions;

(e) activity where the qualifying cryptoasset is—

(i) issued by, or on behalf of, the person carrying on the activity, and

(ii) sold to or subscribed for by an employee or partner of the person carrying on the activity.

(2) There is excluded from article 9W activity specified by—

(a) article 9M (issuing qualifying stablecoin);

(b) article 9S (operating a qualifying cryptoasset trading platform);

(c) article 9Z6 (qualifying cryptoasset staking).

Section 9Y Arranging deals in qualifying cryptoassets

(1) Making arrangements for another person,whether as principal or agent, to buy, sell, subscribe for or underwrite a qualifying cryptoasset is a specified kind of activity.

(2) Making arrangements with a view to a person who participates in the arrangements for the buying, selling, subscribing for or underwriting a qualifying cryptoasset, whether as principal or agent, is also a specified kind of activity.

Section 9Z Article 9Y exclusion: arrangements not causing a deal

There are excluded from article 9Y(1) arrangements which do not, or would not, bring about the transaction to which the arrangements relate.

Section 9Z1 Article 9Y exclusion: introducing

There are excluded from article 9Y(2) arrangements where they are solely arrangements under which a person will be introduced to an authorised person with a Part 4A permission to carry on the regulated activity specified by this Chapter.

Section 9Z2 Article 9Y exclusion: enabling parties to communicate

A person does not carry on an activity specified by article 9Y(2) merely by providing means by which one party to a transaction, or potential transaction, is able to communicate with other such parties.

Section 9Z3 Article 9Y exclusion: arranging transactions to which the arranger is a party

(1) There are excluded from article 9Y(1) arrangements for a transaction into which the person making the arrangements enters or is to enter as principal or agent for another person.

(2) There are excluded from article 9Y(2) arrangements which a person (“ A ”) makes with a view to transactions into which A enters or is to enter as principal or agent for another person.

Section 9Z4 Article 9Y exclusion: trustees, nominees and personal representatives

(1) There are excluded from article 9Y arrangements made by a person (“ A ”) acting as trustee or personal representative for, or with a view to a transaction which is, or is to be, entered into by—

(a) A and a fellow trustee or personal representative, acting in their capacity as such, or

(b) a beneficiary under the trust, will or intestacy.

(2) Paragraph (1) does not apply where A is remunerated for what A does in addition to any remuneration A receives as trustee or personal representative, and for these purposes A is not to be regarded as receiving additional remuneration merely because A’s remuneration is calculated by reference to time spent.

Section 9Z5 Article 9Y: other exclusions

(1) There is excluded from article 9Y the following activities—

(a) the creation, including the design, of a qualifying stablecoin;

(b) the minting of a qualifying stablecoin, such that it first exists as—

(i) an identifiable asset on the blockchain, and

(ii) in a transferable form;

(c) activity where the qualifying cryptoasset is acquired or transferred for no consideration;

(d) the distribution of a qualifying cryptoasset that was automatically created as a reward for the maintenance of the distributed ledger or the validation of transactions;

(e) activity where the qualifying cryptoasset is—

(i) issued by, or on behalf of, the person carrying on the activity, and

(ii) sold to or subscribed for by an employee or partner of the person carrying on the activity;

(f) any activity where—

(i) a person (“ A ”) who only makes arrangements for, or with a view to, a transaction which is or is to be entered into, as principal, by another member of the same group, and

(ii) A is not authorised or required to be authorised to carry on an activity specified by this Chapter.

(2) There is excluded from article 9Y activity specified by—

(a) article 9M (issuing qualifying stablecoin);

(b) article 9S (operating a qualifying cryptoasset trading platform);

(c) article 9Z6 (qualifying cryptoasset staking).

Section 9Z6 Qualifying cryptoasset staking

(1) Making arrangements on behalf of another person (whether as principal or agent) for qualifying cryptoasset staking is a specified kind of activity.

(2) In this article—

“ blockchain validation ” means the validation of transactions on—

a blockchain, or

a network that uses distributed ledger technology or other similar technology,

and includes proof of stake distributed ledger technology consensus mechanisms;

“ qualifying cryptoasset staking ” means the use of a qualifying cryptoasset in blockchain validation.

Section 9Z7 Article 9Z6 exclusion: introducing

There is excluded from article 9Z6 the provision of services solely for the purpose of introducing a person to an authorised person with a Part 4A permission to carry on the regulated activity specified by article 9Z6.

Section 9Z8 Article 9Z6 exclusion: enabling parties to communicate

A person does not carry on the activity specified by article 9Z6 merely by providing means by which one party to an arrangement, or potential arrangement, is able to communicate with other such parties.

Section 9Z9 Article 9Z6 exclusion: technical services exclusion

There is excluded from article 9Z6 a technical service provided by a person (a “P”) where—

(a) the service allows another person to participate in qualifying cryptoasset staking, as defined by article 9Z6, including by the operation of a validator node for that staking, and

(b) P does not hold itself out as offering qualifying cryptoasset staking to the public.

Section 9Z10 Activities carried on for the sale of goods or supply of services

(1) There is excluded from this Chapter an activity carried on for the purpose of the sale of goods or supply of services, by a supplier to a customer.

(2) Paragraph (1) does not apply to article 9N (safeguarding of qualifying cryptoassets and relevant specified investment cryptoassets) so far as that article applies to relevant specified investment cryptoassets.

(3) There is also excluded from the following articles activity for the purpose of a related sale of goods or supply of services—

(a) article 9T (dealing in qualifying cryptoassets as principal);

(b) article 9W (dealing in qualifying cryptoassets as agent);

(c) article 9Y (arranging deals in qualifying cryptoassets).

(4) In this article—

“ customer ” means a person to whom a supplier sells goods or supplies services, or agrees to do so, and, where the customer is a member of a group, also means any other member of that group;

“ related sale of goods or supply of services ” means a sale of goods or supply of services to the customer otherwise than by the supplier, but for the purpose of the sale or supply mentioned in paragraph (1);

“ supplier ” means—

a person whose main business is to sell goods or supply services, and

where the supplier is a member of a group, includes any other member of that group;

“ supply of services ” does not include the provision of a service comprising an activity of a kind specified by any provision of this Chapter.

Section 9Z11 Activities incidental to the carrying on of a profession or business

(1) There is excluded from this Chapter activity where that activity (“the incidental activity”)—

(a) is carried on in a manner that is incidental to the carrying on of a profession or business, and

(b) does not itself constitute the carrying on of a regulated activity.

(2) For the purposes of paragraph (1)(a), an activity is carried on in a manner that is incidental to the carrying on of a profession or business where the following apply—

(a) a close factual connection exists between the carrying on of the profession or business and the incidental activity, such that the incidental activity may reasonably be regarded as a necessary ancillary to the carrying on of the profession or business,

(b) the incidental activity does not provide a systematic source of income to the person providing the professional activity,

(c) the person carrying on the professional activity does not market or otherwise promote their ability to provide the incidental activity, except where there are disclosed to clients as being a necessary ancillary to the carrying on of the profession or business, and

(d) the carrying on of a profession or business is supervised and regulated by any of the bodies listed in article 2 of the Financial Services and Markets Act 2000 (Designated Professional Bodies) Order 2001 .

Section 9AA ... Managers of UCITS and AIFs

Article 5 is subject to the exclusion in ... article 72AA (managers of UK UCITS and AIFs).

Section 9AB Funds received for payment services

(1) A sum is not a deposit for the purposes of article 5 if it is received by an authorised payment institution, an EEA authorised payment institution , a small payment institution, an electronic money institution or an EEA authorised electronic money institution from a payment service user with a view to the provision of payment services.

(2) For the purposes of paragraph (1), “authorised payment institution”, “ EEA authorised payment institution”, “small payment institution”, “payment services” and “payment service user” have the meanings given in the Payment Services Regulations 2017 and “electronic money institution” and “EEA authorised electronic money institution” have the meanings given in the Electronic Money Regulations 2011.

Section 9AC Local authorities

Article 5 is subject to the exclusion in article 72G (local authorities).

Section 9BA Issuing electronic money

Articles 9C to 9I and 9K apply only in the case of a person falling within regulation 76(1) of the Electronic Money Regulations 2011.