UK FCA Launches Consultation on DeFi Compliance and Crypto Asset Exemptions

Huo Xing Finance reports that on October 22, the UK Financial Conduct Authority (FCA) announced the launch of two consultation periods: one on how businesses using decentralized finance (DeFi) should comply with its guidance, and another regarding exemptions for certain cryptoassets due to “recent legislative changes.” In a statement released on Wednesday, the FCA opened a consultation aimed at helping DeFi businesses comply with the regulator’s anti-money laundering and financial crime rules. The agency also announced a consultation on “cryptoasset regulatory exemptions,” citing recent UK legislative developments. Regarding DeFi, the FCA stated that the proposed guidance “aims to clarify existing rules rather than introduce new policy.” “DeFi is among the most innovative areas within (financial services),” the UK Cryptoasset Business Council responded to the consultation. “The UK can still achieve the right balance—clear boundary rules, proportionate expectations, and a framework that allows responsible innovation to take root here rather than migrate elsewhere... The FCA needs to handle this appropriately.” The cryptoasset exemption refers to a regulatory regime previously announced by the FCA covering custody arrangements and reserve assets for stablecoins, scheduled to come into effect on October 1, 2027. The FCA opened its application channel for crypto entities on September 30; firms seeking compliance must submit applications by the February 28, 2027 deadline.