In brief

  • Archax has become the first FCA-regulated digital securities exchange.
  • Its FCA license covers trading, as well as custody and brokerage permissions.
  • It is registered as a Virtual Asset Service Provider.

Archax has today become the UK’s first formally regulated digital securities exchange, as well as becoming the first ever company to receive FCA crypto asset registration as a Virtual Asset Service Provider (VASP).

This is an important step that can inspire confidence in the global digital securities market. It will now be possible for digital issuances around the world to trade on a secondary market authorised by a globally recognised regulatory body. This move can also help mainstream blockchain technology, which digital securities use to tokenise real world assets. 

“Perhaps we don’t fit into some people’s view of what blockchain could be, but we would argue that regulation is there for a reason, and we want to embrace the technology but do it within the regulation, and we think it moves forward faster once you do that,” Graham Rodford, CEO of Archax told Decrypt

The FCA’s authorisation covers three main areas. First, multilateral trading facility permissions, which allow Archax to operate a digital securities marketplace in London. Second, CASS custody permissions allow Archax to offer a regulated custody service for digital assets as well as client cash. Brokerage permissions will also allow the company to engage with professional investors as well as investment firms. 

In addition to these permissions, Archax’s VASP listing has been introduced as part of the Fifth Money Laundering Directive, a new piece of European legislation designed to crack down on money laundering and terrorist financing. 

The current climate has been difficult for small and medium sized enterprises (SME)—but Archax may be able to make that easier. Rodford added, “There’s probably never been a time, certainly in my lifetime, where SMEs need more access to capital than ever, so actually perhaps the timing of our venue couldn’t be better.”