Modifications: Control over registered cryptoasset exchange providers and registered custodian wallet providers
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With respect to an acquisition of or an increase in control over a cryptoasset business, Part 12 of FSMA (control over authorised persons) applies with the following modifications— (a) references to a “UK authorised person” are to be read as references to a registered cryptoasset exchange provider or registered custodian wallet provider to which Part 12 of FSMA does not otherwise apply; (b) references to “appropriate regulator” and “each regulator” are to be read as references to the FCA; (c) section 178 (obligation to notify the appropriate regulator: acquisitions of control) is to be read as if— (i) subsection (2ZA) were omitted; (ii) subsection (2A) were omitted; (d) section 181 (acquiring control) is to be read as if— (i) for the heading there were substituted “Acquiring or increasing control” ; (ii) for subsections (1) and (2) there were substituted— For the purposes of this Part, a person (“ A ”) acquires or increases control over a UK authorised person (“ B ”) or a parent undertaking of B (“ P ”) if A would become a beneficial owner of B or P within the meaning of regulations 5 or 6 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 if the acquisition were to proceed. (e) section 182 (increasing control) and section 183 (reducing or ceasing to have control) are to be disregarded; (f) section 184 (disregarded holdings) is to be read as if— (i) in subsection (1), for “For the purposes of sections 181 to 183” there were substituted “For the purposes of section 181” ; (ii) subsections (4) to (10) were omitted; (g) section 185 (assessment: general) is to be read as if— (i) in subsection (2)(a), “and the financial soundness of the acquisition” were omitted; (ii) in subsection (3)(a), for “matters” there were substituted “matter” ; (h) section 186 (assessment criteria) is to be read as if it said— Assessment criteria (186) The matter specified in section 185(3)(a) is whether the section 178 notice-giver is a fit and proper person within the meaning of regulation 58A of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (fit and proper test: cryptoasset businesses). (i) section 187 (approval with conditions) is to be read as if subsection (2)(b) were omitted; (j) section 187A (assessment: consultation by PRA with FCA) is to be disregarded; (k) section 187B (assessment: consultation by FCA with PRA) is to be disregarded; (l) section 187C (variation etc of conditions) is to be disregarded; (m) section 189 (assessment: procedure) is to be read as if— (i) subsections (1A), (1ZB) and (1B) were omitted; (ii) in subsection (6), “Unless section 190A applies” were omitted; (n) section 190 (requests for further information) is to be read as if subsections (1A) and (4)(b) were omitted; (o) section 190A (assessment and resolution) is to be disregarded; (p) section 191A (objection by the appropriate regulator) is to be read as if— (i) in subsection (2)(c), for “matters in” there were substituted “matter specified in” ; (ii) subsection (4A) were omitted; (iii) after subsection (7) there were inserted— (8) A person (“ A ”) acquires or increases control for the purposes of this section if it acquires or increases control over a UK authorised person (“ B ”) or a parent undertaking of B (“ P ”) by becoming a beneficial owner of B or P within the meaning of regulations 5 or 6 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 . (q) section 191B (restriction notices) is to be read as if— (i) in subsection (2)(a), after “voting power” there were inserted “or otherwise being a beneficial owner (within the meaning of regulations 5 or 6 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017) of the UK authorised person (“ B ”) or a parent undertaking of B” ; (ii) in subsection (2)(b), “in relation to the shares or voting power,” were omitted; (iii) subsection (2A) were omitted; (iv) after subsection (3) there were inserted— (3ZA) In a restriction notice, the appropriate regulator may direct that, in respect of a beneficial owner of a UK authorised person (“ B ”) or a parent undertaking of B, until further notice, no influence over the management or activities of B is to be exercisable by the beneficial owner. (v) subsection (3A) were omitted; (vi) in subsection (6)(b), after “held in” there were inserted “, or beneficial ownership of,” ; (r) section 191C (orders for sale of shares) is to be read as if subsections (2A), (7) and (8) were omitted; (s) section 191D (obligation to notify the appropriate regulator: dispositions of control) is to be read as if— (i) subsection (1A) were omitted; (ii) after subsection (2) there were inserted— (3) For the purposes of this section, a person (“ A ”) reduces or ceases to have control over a UK authorised person (“ B ”) or a parent undertaking of B (“ P ”) if A would cease to be a beneficial owner of B or P within the meaning of regulations 5 or 6 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 if the disposition were to proceed. (t) section 191F (offences under this Part) is to be read as if— (i) in subsection (2), “or section 190A applies” were omitted; (ii) subsection (4A) were omitted; (iii) for subsections (8) and (9) there were substituted— (8) A person guilty of an offence under subsection (1) to (3) or (5) to (7) is liable— (a) on summary conviction— (i) in England and Wales, to a fine; (ii) in Scotland or Northern Ireland, to a fine not exceeding the statutory maximum; (b) on conviction on indictment, to a fine. (9) A person guilty of an offence under subsection (4) is liable— (a) on summary conviction— (i) in England and Wales, to a fine; (ii) in Scotland or Northern Ireland, to a fine not exceeding the statutory maximum; (b) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine, or both. (iv) after subsection (9) there were inserted— (10) A person is not guilty of an offence under this section if that person took all reasonable steps and exercised all due diligence to avoid committing the offence. (u) section 191G (interpretation) is to be read as if the definitions of “the appropriate regulator”, “qualifying credit institution” and “UK authorised person” were omitted.