UK FCA Opens Two Consultations on DeFi and Crypto Rules

The UK Financial Conduct Authority opened two consultations on October 21 to clarify how existing rules apply to decentralized finance and which crypto activities will require authorization under the country’s incoming regulatory regime. Responses are due November 18, and the FCA expects to publish final guidance in January 2027. One consultation addresses firms that use decentralized protocols or provide customers with access to them. The FCA’s proposed guidance says businesses remain responsible for existing obligations, including operational resilience, financial crime controls and anti-money-laundering requirements, when they use decentralized systems. It does not establish a separate rulebook for DeFi. The second consultation concerns the boundary of the new cryptoasset regime and activities that may be excluded from authorization requirements. The FCA says the assessment should turn on the service a business performs, not simply on whether it uses smart contracts, distributed ledgers or decentralized governance. The proposed exclusions include certain stablecoin payment arrangements, proprietary trading and technical services limited to enabling access to another service...