Operating or listing on a crypto exchange

Cryptocurrency exchanges are regulated under the SFA and/or the PSA.

If the cryptocurrencies offered on the cryptocurrency exchange are characterised as capital markets products, then the cryptocurrency exchange will be regulated as an approved exchange or recognised market operator under the SFA. The cryptocurrency exchange may also require a capital markets services licence for dealing in capital markets products under the SFA.

If, however, the cryptocurrencies offered on the cryptocurrency exchange are characterised as digital payment tokens, then the cryptocurrency exchange will be regulated as a standard or major payment institution providing digital payment token services under the PSA, depending on the value of payment transactions processed by the cryptocurrency exchange.

If the exchange constitutes a “digital payment token exchange” under the Payment Services Act 2019.

If the exchange constitutes a “digital payment token exchange” under the Payment Services Act 2019, which refers to a place or facility where offers or invitations to buy or sell any digital payment token in exchange for any money or any other digital payment token, are regularly made on a centralised basis, those offers or invitations are intended, or may reasonably be expected, to result (whether directly or indirectly) in the acceptance of those offers or in the making of offers to buy or sell digital payment tokens in exchange for money or other digital payment tokens, as the case may be, and the person making any such offer or invitation, and the person accepting that offer or making an offer in response to that invitation, are different persons. It does not include a place or facility (whether electronic or otherwise) that is used exclusively by one person to do only either or both of the following things: (i) to make offers or invitations to buy or sell any digital payment token in exchange for any money, or any digital payment token (whether of the same or a different type), or (ii) to accept any offer to buy or sell any digital payment token in exchange for any money, or any digital payment token (whether of the same or a different type).

Part 3 of the First Schedule, Payment Services Act 2019