Chapter 18 'Virtual Assets' has been added to the Handbook, which provides VASPs with guidance on how to meet their obligations within Schedule 3 and the rules of the Handbook. It also contains rules and guidance on the information required to accompany transfers of virtual assets. 

The guidance in the Chapter is in addition to, and not in place of, the guidance within other chapters of the Handbook. VASPs fall within the definition of a specified business and therefore the Handbook is applicable to such firms. 

Chapter 18 also provides guidance for specified business which are not licensed as VASPs but have business relationships or occasional transactions with a connection to, or involvement with, virtual assets. Examples where this may arise include where a customer’s source of wealth or funds derives from virtual assets, or an investment within a structure administered by a specified business holds virtual assets.

The draft rules and guidance include specific information requirements on originators and beneficiaries of virtual asset transfers and the information requirements on virtual asset transfers of £1,000 (or equivalent value) or less, as indicated in the draft legislation.

Licensed VASPS are required to meet all the provisions within Schedule 3 and the associated rules in the Handbook. The chapter has guidance on how VASPS can apply a risk-based approach and comply with customer due diligence and enhanced customer due diligence measures.

This chapter also includes additional risk factors specific to virtual assets to help VASPs and other licensees which are not licensed as a VASP, but which have business connected to virtual assets, to identify, understand and mitigate specific risks attached to virtual assets when dealing with customers where there is a virtual asset connection.

See the draft legislation here.

See the proposed chapter on virtual sssets here.

The consultation also seeks comments on proposed additional rules and guidance for trustees of trusts and partners (excluding limited partners) of partnerships and limited partnerships without legal personality to hold information on the identity of other regulated agents and service providers to a trust or partnership, and disclose their status as trustee or partner. These rules will apply to licensed trustees and licensed partners.

Deadline for responses is 3 July 2023..