Regulation 34 Legitimate cryptoasset market practice

(1)

The FCA may by designated activity rules specify a market practice as a legitimate cryptoasset market practice.

(2)

In making designated activity rules by virtue of paragraph (1), the FCA must take account of the following matters—

(a)

whether the market practice provides for an appropriate level of transparency to the financial services market in the United Kingdom in relation to relevant qualifying cryptoassets and related instruments;

(b)

whether the market practice supports the effective functioning of the financial services market in the United Kingdom in relation to relevant qualifying cryptoassets and related instruments;

(c)

whether the market practice supports the liquidity and efficiency of the financial services market in the United Kingdom in relation to relevant qualifying cryptoassets and related instruments;

(d)

whether the market practice supports order and transparent pricing in the financial services market in the United Kingdom in relation to relevant qualifying cryptoassets and related instruments;

(e)

whether the market practice enables market participants in the financial services market in the United Kingdom in relation to relevant qualifying cryptoassets and related instruments to react properly and in a timely manner to any new situation created by that practice;

(f)

whether the market practice does not create inappropriate or disproportionate risks to the integrity of the financial services market in the United Kingdom in relation to relevant qualifying cryptoassets and related instruments;

(g)

whether the current market practice supports the legitimate handling and disclosure of inside information in relation to relevant qualifying cryptoassets and related instruments, and does not create inappropriate or disproportionate risks in relation to the unlawful disclosure of inside information or insider dealing;

(h)

whether the market practice supports the effective, efficient and orderly settlement in the financial services markets in the United Kingdom in relation to relevant qualifying cryptoassets and related instruments;

(i)

whether the market practice supports innovation in the financial services market in the United Kingdom in relation to relevant qualifying cryptoassets and related instruments;

(j)

the current market practice in relation to the processing of inside information in relation to qualifying cryptoassets and related instruments.

(3)

In considering the matters specified by paragraph (2) above, the FCA must have regard to—

(a)

the nature and type of the relevant qualifying cryptoasset or related instrument and its market, and

(b)

the nature and type of market participants, including the extent of individual participation.