(Reuters) — Britain’s financial markets watchdog set out which aspects of the nascent cryptocurrency industry it regulates on Wednesday, as volatile digital assets come under greater scrutiny.

The Financial Conduct Authority also said it would consult later this year on a proposed ban on selling derivatives linked to certain cryptocurrencies to retail customers. Such products are increasingly harmful globally, the FCA said.

Cryptocurrencies rocketed in value in 2017 but fell heavily last year. Bitcoin, the original and biggest, fell by nearly three-quarters in 2018, triggering warnings from regulators across the world worried about consumer protection, financial stability and illicit usage.

Policymakers are now working out how, if at all, cryptocurrencies come under existing financial rules, and whether fresh regulation is needed.

Regulatory approaches have varied heavily, from China’s outright banning of cryptocurrency trading to Japan’s system of licensing crypto exchanges.

The FCA is aiming to create suitable rules for Britain while following global trends, its executive director of strategy and competition, Christopher Woolard, told Reuters.

“It’s about running a twin track, getting the right answer for the U.K. but moving in concert with international colleagues,” said Mr. Woolard.

The FCA’s guidance categorizes different types of so-called crypto assets to say whether they fall under its regulatory net. Firms must then obtain a license from the FCA if they engage in activities that fall within that net.

The watchdog’s guidance looked at assets including “security tokens,” which resemble shares or debt, and “utility tokens,” which allow access to products or services without giving holders any rights.

While the FCA says U.K.-headquartered exchanges account for around 1% of daily global trade, London’s status as a financial hub has attracted major crypto firms. Regulatory moves by Britain are therefore closely watched.

CryptoUK, an industry body, said in a statement that policymakers should balance their consumer protection role with a framework that helps the sector expand and attract investment.

The FCA will hold a public consultation on the guidance. It also said the government would publish a consultation paper in early 2019 on whether to change the law to broaden the watchdog’s remit to include further types of cryptocurrencies.

Lawyers and consultants involved in the industry broadly welcomed the FCA’s move.

“We here in the U.K. — given that we are a large financial services sector — need to have clarity in order to be able to enable people to invest,” said KPMG’s Anton Ruddenklau, who advises large corporations and entrepreneurs involved in the crypto sector.