You are viewing CRYPTO 9.6 Qualifying cryptoasset borrowing collateral as it appeared on 25/10/2027. The current version of CRYPTO 9.6 Qualifying cryptoasset borrowing collateral was last updated on 25/10/2027.

CRYPTO 9.6 Qualifying cryptoasset borrowing collateral

Provision of qualifying cryptoasset borrowing collateral

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This section applies to a firm when it provides a qualifying cryptoasset borrowing service to retail clients.

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  1. (1) A firm providing a qualifying cryptoasset borrowing service to a retail client must require qualifying cryptoasset borrowing collateral to be provided by the retail client to the firm before the provision of the qualifying cryptoasset borrowing service.
  2. (2) The amount of qualifying cryptoasset borrowing collateral to be provided by the retail client under (1) must have a market value that exceeds the market value of the qualifying cryptoassets provided to the retail client as part of the qualifying cryptoasset borrowing service.
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CRYPTO 9.6.2R(1) does not require the firm itself to receive the qualifying cryptoasset borrowing collateral from the retail client. The firm may arrange for another person to safeguard the qualifying cryptoasset borrowing collateral for the retail client, in accordance with the conditions set out in CRYPTO 9.6.8R.

Additional qualifying cryptoasset borrowing collateral

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  1. (1) Subject to (3) and (4) and CRYPTO 9.6.5R to CRYPTO 9.6.6R, a firm may provide for retail clients to supplement their initial qualifying cryptoasset borrowing collateral.
  2. (2) In relation to (1), a firm may:
    1. (a) allow for retail clients to supplement their initial qualifying cryptoasset borrowing collateral themselves; and/or
    2. (b) provide a facility in terms of which the firm may supplement the initial qualifying cryptoasset borrowing collateral on the retail client’s behalf.
  3. (3) Where a firm provides the facility in (2)(b) to supplement the initial qualifying cryptoasset borrowing collateral on the retail client’s  behalf, the firm must obtain the retail client’s express prior consent.
  4. (4) Where a retail client has provided express prior consent per (3), the firm may only exercise this right in relation to assets or currency that the retail client has expressly made available for that purpose.
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  1. (1) Where a retail client has provided express prior consent for the firm to supplement its qualifying cryptoasset borrowing collateral on that retail client’s behalf pursuant to CRYPTO 9.6.4R(2)(b), the total additional assets (which may include qualifying cryptoassets) or currency that may be applied to the retail client’s initial qualifying cryptoasset borrowing collateral, whether in one or more applications, must not exceed 50% of the market value of the initial qualifying cryptoasset borrowing collateral at the commencement of the qualifying cryptoasset borrowing service.
  2. (2) For the purposes of (1), any fees, charges or interest payable by the retail client in respect of the qualifying cryptoasset borrowing must be deducted from the maximum additional qualifying cryptoasset borrowing collateral amount.
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  1. (1) Prior to the commencement of a qualifying cryptoasset borrowing service, a firm must provide a retail client with the option to set a limit on the amount by which the firm may supplement the initial qualifying cryptoasset borrowing collateral on the retail client’s behalf pursuant to CRYPTO 9.6.4R(2)(b).
  2. (2) The limit chosen by the retail client may not be higher than the maximum additional qualifying cryptoasset borrowing collateral amount prescribed under CRYPTO 9.6.5R.
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  1. (1) CRYPTO 9.6.5R and CRYPTO 9.6.6R apply only in relation to the supplementing of a retail client’s qualifying cryptoasset borrowing collateral by the firm on the retail client’s behalf pursuant to CRYPTO 9.6.4R(2)(b).
  2. (2) Nothing in this section is intended to prevent a retail client from supplementing their qualifying cryptoasset borrowing collateral themselves, including by providing additional assets or currency directly, during the qualifying cryptoasset borrowing service.

Restriction on re-use of qualifying cryptoasset borrowing collateral

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  1. (1) Where the qualifying cryptoasset borrowing collateral provided by a retail client pursuant to CRYPTO 9.6.2R(1) is a qualifying cryptoasset or relevant specified investment cryptoasset, a firm must ensure the outcome in either (a) or (b), and must also comply with (c):
    1. (a) Provided the firm has Part 4A permission to carry on safeguarding cryptoassets, the firm structures the collateral arrangements so that it is itself carrying on the regulated activity of safeguarding cryptoassets in relation to the qualifying cryptoasset borrowing collateral.
    2. (b) Provided the firm has Part 4A permission to carry on arranging cryptoasset safeguarding, the firm structures the collateral arrangements so that it carries on the regulated activity of arranging cryptoasset safeguarding in relation to the qualifying cryptoasset borrowing collateral, with the effect that an authorised person with permission to carry on the regulated activity of safeguarding cryptoassets is carrying on that regulated activity for the firm’s retail client in relation to the qualifying cryptoasset borrowing collateral.
    3. (c) The firm must ensure that any collateral arrangements in the course of either (a) or (b) do not result in the firm or any other person obtaining full ownership of the qualifying cryptoasset borrowing collateral other than where the retail client has provided express prior consent to a transfer of full ownership in order to discharge the retail client’s indebtedness to the firm in relation to the qualifying cryptoasset borrowing service in accordance with CASS 17.3.10R.
  2. (2) Where the qualifying cryptoasset borrowing collateral provided by the retail client pursuant to CRYPTO 9.6.2R(1) is a security or contractually based investment, a firm must ensure the outcome in either (a) or (b), and must also comply with (c):
    1. (a) Provided the firm has Part 4A permission to carry on safeguarding and administering investments, the firm structures the collateral arrangements so that it is itself carrying on the regulated activity of safeguarding and administering investments in relation to the qualifying cryptoasset borrowing collateral.
    2. (b) Provided the firm has Part 4A permission to carry on arranging safeguarding and administration of assets, the firm structures the collateral arrangements so that it arranges for one or more other persons to safeguard the qualifying cryptoasset borrowing collateral, with the effect that an authorised person with permission to carry on the regulated activity of safeguarding and administering investments is carrying on that regulated activity for the firm’s retail client in relation to the qualifying cryptoasset borrowing collateral.
    3. (c) The firm must ensure that any collateral arrangements in the course of either (a) or (b) do not result in the firm or any other person obtaining full ownership of the qualifying cryptoasset borrowing collateral other than where the retail client has provided express prior consent to a transfer of full ownership in order to discharge the retail client’s indebtedness to the firm in relation to the qualifying cryptoasset borrowing service.
  3. (3) Where the qualifying cryptoasset borrowing collateral is money, the firm must ensure that the collateral arrangements do not result in the firm or any other person obtaining full ownership of the qualifying cryptoasset borrowing collateral other than where the retail client has provided express prior consent to a transfer of full ownership in order to discharge the retail client’s indebtedness to the firm in relation to the qualifying cryptoasset borrowing service.
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  1. (1) A consequence of CRYPTO 9.6.8R(1) is that the retail client has the benefit of the protections of the cryptoasset safeguarding rules in CASS 17 in relation to any qualifying cryptoasset borrowing collateral which is a qualifying cryptoasset or specified investment cryptoasset.
  2. (2) The rules at CASS 17.3.4R(4) and CASS 17.3.6R(6) restrict how that qualifying cryptoasset borrowing collateral may be used.
  3. (3) A consequence of CRYPTO 9.6.8R(2) is that the retail client has the benefit of the protections of the custody rules in CASS 6 in relation to any qualifying cryptoasset borrowing collateral which is a security or contractually based investment.
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  1. (1) Firms should note that the requirements on qualifying cryptoasset borrowing collateral in this section, as well as in CASS 17, limit how qualifying cryptoasset borrowing collateral may be used.
  2. (2) However, the FCA considers that it should still be possible for a firm to provide a qualifying cryptoasset staking service for a qualifying cryptoasset held as qualifying cryptoasset borrowing collateral provided:
    1. (a) the firm provides the qualifying cryptoasset staking service in compliance with the staking rules in CRYPTO 10;
    2. (b) neither the firm nor any other person obtains full ownership of the qualifying cryptoasset borrowing collateral, as set out in CRYPTO 9.6.8R(1); and
    3. (c) the qualifying cryptoasset borrowing collateral is safeguarded as client cryptoassets in accordance with CASS 17.3.3R.
  3. (3) This means that a firm that wishes to provide a qualifying cryptoasset staking service using a qualifying cryptoasset held as qualifying cryptoasset borrowing collateral will need to consider carefully the way in which that qualifying cryptoasset staking may be performed and the technical features of that qualifying cryptoasset staking to ensure the firm’s compliance with its obligations is not undermined.
Point In Time
25/10/2027