UK FCA releases draft DeFi guidance on regulatory perimeter

The UK Financial Conduct Authority released draft guidance CP26/36 on Oct. 21 regarding the regulatory status of DeFi services. The proposal states that technology services providing access to decentralized protocols may be exempt from authorization, while services involving subjective intervention, such as liquidity route selection or optimization, may require authorization as they are considered arranging transactions. The guidance clarifies that writing code itself is not regulated, but entities operating or controlling a system for commercial benefits may be subject to regulation based on case-by-case assessments. Authorized financial firms utilizing DeFi must adhere to existing compliance obligations, including security and anti-money laundering requirements, regardless of their control over the underlying protocol. The consultation period will end on Nov. 18, and the complete cryptoasset regulatory framework is set to take effect on Oct. 25, 2027.

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