UK financial watchdog opens consultations for DeFi guidance, crypto laws

The UK's Financial Conduct Authority (FCA) has initiated consultations to establish guidance for decentralized finance (DeFi) companies, in line with recent legislative changes. These consultations were announced just weeks after the FCA opened applications for companies under its new crypto regulatory regime. The FCA's notice revealed that it would provide consultation periods for DeFi firms to comply with its rules on money laundering and financial crime, as well as exclusions from cryptoasset regulation due to recent legislation.

The FCA stated that the proposed guidance aims to clarify existing rules rather than establish new policy, with DeFi being seen as one of the most innovative parts of the financial services sector. The UK Cryptoasset Business Council echoed this sentiment, emphasizing the importance of striking the right balance between clear perimeter rules, proportionate expectations, and a framework that encourages responsible innovation within the UK, rather than driving it away to other jurisdictions.

Moreover, the FCA announced its plans to enforce a regulatory regime, including stablecoin holding arrangements and reserve assets, starting in October 2027. Companies seeking crypto regulatory compliance have until Feb. 28, 2027, to submit their applications, with the deadline for these submissions coinciding with the initial announcement of the DeFi guidance consultations.