Global Glosssary: Includes FCA Definitions & Handbook references

Non-readily realisable security a security which is not any of the following:

…

(c) non-mass market investment;

…

(e) a deferred share issued by a credit union; or

(f) credit union subordinated debt;

(except in COBS 4.12B, COLL and for the purposes of the definition of non-readily realisable security):

Notifiable concern has the meaning in SUP 16.30.7R.

The process of exchanging cryptoassets for fiat currency

The process of exchanging fiat currency (such as US dollars) for cryptoassets.

A system which allows the transfer of value between different parties through a payment scheme. Commonly initiated by the merchant to issuing and acquiring bank.

Any personalised device or personalised set of procedures agreed between a customer and the payment service provider (such as a bank) used by the customer to initiate payments. This includes debit and credit cards as well as payments made online and through mobile applications.

The interface as referred to in Article 30 of the Regulatory Technical Standards on Strong Customer Authentication. Interface enables secure communication with account information service providers, payment initiation service providers and payment service providers issuing cardbased payment instruments.

A ‘payment order’ is, in summary, an instruction to a PSP to fall within the definition of ‘payment instrument’. It is a set of procedures that enables the consumer to instruct a payment initiator to transfer funds to a merchant

A natural or legal person permitted under the Payment Services Regulations 2017 (PSRs) to provide payment services in the UK, including those authorised or registered under the PSRs, credit institutions, agents, governmental departments, and local authorities.

Payment services are listed in Schedule 1 Part 1 to the PSRs 2017. This includes but is not limited to services such as the execution of payment transactions, including transfers of funds on a payment account with the user’s payment service provider or with another payment service provider; issuing payment instruments or acquiring payment transactions; money remittance; payment initiation services and account information services.

The PSRs 2017 govern the authorisation and associated requirements for authorised or registered payment institutions (PIs). They also set the conduct of business rules for providing payment services.

A payment system allows settlement of payment transactions through the transfer of value. There are eight designated payment systems in the UK: BACS, CHAPS, Credit and Cheque, Faster Payment Scheme, Link, Mastercard, Visa Sterling, Finality Payment system which used DLT to transfer funds.

The process of initiating the placing, transferring, or withdrawing funds. Examples include payments with credit cards, transferring funds from a bank account to pay bills or using a mobile application to send funds.

A stablecoin’s targeted reference value (eg 1:1 with the US dollar)

Permitted approver in relation to a financial promotion, a firm that is entitled to approve that financial promotion under the terms of its approver permission.

A scammer may use a variety of methods to establish a relationship (either social, romantic, or business focus), and then gain the victim’s confidence and gradually introduce the victim to a fraudulent investment opportunity. In most cases, Scammers will approach victims through social media or dating apps, ask to take the conversation offline (e.g., WhatsApp, WeChat), and then communicate regularly with the victim to establish the relationship. Once Scammer has the victim’s trust, Scammer will then propose an investment opportunity related to crypto assets. The scammer will offer to train the victim to set up an account on an exchange to purchase crypto assets, and then provide a website or wallet address for the victim to transfer funds in order to participate in the investment opportunity. The fraudulent platform investment opportunity is often designed to appear legitimate and often produces artificial gains to keep the victim engaged in the platform and possibly deposit more funds. However, the victim is never able to withdraw their funds from the site and may be asked to transfer even more funds before anything can be withdrawn through a variety of excuses (e.g., service fees, IRS taxes, etc.).

• (1) A firm must support retail customer understanding so that its communications:

• • (a) meet the information needs of retail customers;
  • (b) are likely to be understood by retail customers; and
  • (c) equip retail customers to make decisions that are effective, timely and properly informed.
• (2) A firm must communicate information to retail customers in a way which is clear, fair and not misleading.

A firm must act to deliver good outcomes for retail customers.

Communications with clients

A firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading.

An alphanumeric string that is univocally associated to a blockchain address and enables the possessor of the key to sign (i.e., authorise, send, validate) transactions.

Proof of Reserves (or PoR) is an independent audit process which cryptoasset firms can use to verify that the client assets they are holding in custody correspond 1:1 with the assets they hold in reserve.

An alphanumeric string that is univocally associated to a blockchain address and which has two main functions: to enable the generation of (read-only) addresses for the reception of messages and/or transactions, and to enable the decoding and verification of a signed message and therefore allows recipients of the message to verify and accept it.

Qualifying cryptoasset (as defined in paragraph 26F (Qualifying cryptoasset) of Schedule 1 to the Financial Promotion Order):

(1) Any cryptoasset (other than a cryptoasset falling in (2)) which is:

(a) fungible; and

(b) transferable.

(2) A cryptoasset does not fall within (1) if it is:

(a) a controlled investment falling within any of paragraphs 12 to 26E or, so far as relevant to any such investment, paragraph 27 of Schedule 1 to the Financial Promotion Order;

b) electronic money (as defined in regulation 2(1) (Interpretation) of the Electronic Money Regulations);

(c) fiat currency;

(d) fiat currency issued in digital form; or

(e) a cryptoasset that:

(i) cannot be transferred or sold in exchange for money or other cryptoassets, except by way of redemption with the issuer; and

(ii) can only be used in a limited way and meets one of the following conditions:

(1) it allows the holder to acquire goods or services only from the issuer;

(2) it is issued by a professional issuer and allows the holder to acquire goods or services only within a limited network of service providers which have direct commercial agreements with the issuer; or

(3) it may be used only to acquire a very limited range of goods or services.

(3) For the purposes of this definition, a cryptoasset is any cryptographically secured digital representation of value or contractual rights that:

(a) can be transferred, stored or traded electronically; and

(b) uses technology supporting the recording or storage of data (which may include distributed ledger technology)

Qualifying cryptoasset (as defined in paragraph 26F (Qualifying cryptoasset) of Schedule 1 to the Financial Promotion Order):

(1) Any cryptoasset (other than a cryptoasset falling in (2)) which is:

(a) fungible; and

(b) transferable.

(2) A cryptoasset does not fall within (1) if it is:

(a) a controlled investment falling within any of paragraphs 12 to 26E or, so far as relevant to any such investment, paragraph 27 of Schedule 1 to the Financial Promotion Order;

b) electronic money (as defined in regulation 2(1) (Interpretation) of the Electronic Money Regulations);

(c) fiat currency;

(d) fiat currency issued in digital form; or

(e) a cryptoasset that:

(i) cannot be transferred or sold in exchange for money or other cryptoassets, except by way of redemption with the issuer; and

(ii) can only be used in a limited way and meets one of the following conditions:

(1) it allows the holder to acquire goods or services only from the issuer;

(2) it is issued by a professional issuer and allows the holder to acquire goods or services only within a limited network of service providers which have direct commercial agreements with the issuer; or

(3) it may be used only to acquire a very limited range of goods or services.

(3) For the purposes of this definition, a cryptoasset is any cryptographically secured digital representation of value or contractual rights that:

(a) can be transferred, stored or traded electronically; and

(b) uses technology supporting the recording or storage of data (which may include distributed ledger technology)

A scammer gains access to a victim’s computer systems or private network, encrypts sensitive information or data, and demands a ransom from the victim to restore access to the encrypted information or data upon payment. The scammer will then provide detailed instructions on how to pay the fee to get the decryption key and may accept payment in crypto assets.