Cryptocurrencies are currently receiving a lot of attention from across the investment world. Bitcoin, which is the most well-known example of a cryptocurrency, continues to be defined as "volatile" by many observers and some have even compared it to the tulip-mania of the C17th. The impact is not limited to existing cryptocurrencies either. Kodak recently unveiled plans to issue its own cryptocurrency - 'KodakCoin' - via an initial coin offering (ICO) as a result of which its share price more than doubled.

Financial regulators are therefore faced with a difficult choice on how to approach regulating cryptocurrencies and ICOs, which are being used as a novel source of funding by various companies. As noted in this article in the Financial Times, Switzerland stands out from the international crowd as it plans to create an ICO-friendly 'crypto valley' to attract more ICOs to take place within its borders. This stands in stark contrast to China and South Korea, which have banned ICOs entirely.

To date, the FCA has adopted a more passive, wait-and-see approach. It published a Feedback Statement in December 2017 (FS17/4) in which it reiterated that cryptocurrencies remain unregulated in the UK and that it would continue to observe the approach of foreign regimes and testing undertaken in its regulatory Sandbox before taking action. This leaves open an unregulated space into which many players are already moving. We shall continue to observe with interest how crypto-regulation develops in the UK and whether Switzerland's pivot is successful or not.