The UK's Financial Conduct Authority (FCA) has opened two consultations to clarify how businesses in the decentralized finance (DeFi) sector will be regulated and what types of crypto activities may receive exemptions by the time the new regime launches in October 2027. The first consultation concerns compliance requirements for financial organizations using decentralized protocols; the second addresses the boundaries of the new cryptoasset regime and possible exemptions. Some stablecoin payment schemes, proprietary trading, and technical provider services may be exempt from regulation.
The consultations opened on October 21, and proposals are accepted until November 18. The FCA plans to publish final recommendations in January 2027. The new regime will take effect on October 25, 2027, when additional cryptoasset activities will come under FCA supervision.
Existing UK crypto businesses can apply for authorization from September 30, 2026, with the window closing on February 28, 2027. Those who apply within the timeframe will be able to continue permitted crypto services while their applications are reviewed. However, submitting an application does not guarantee approval, and existing registration under anti-money laundering regulations will not automatically transfer to the new system.
The FCA noted that the use of smart contracts, distributed ledgers, or decentralized governance does not in itself determine whether authorization is needed. The assessment depends on the specific service and whether the company conducts regulated activities.
The industry welcomed the opportunity to comment on the proposals. The UK Cryptoasset Business Council urged the FCA to establish clear regulatory boundaries and proportional requirements for decentralized services, warning that overly strict rules could force crypto businesses to move operations outside the UK.
This material is prepared solely for informational purposes and does not constitute financial advice or a recommendation.
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