The United Kingdom’s Financial Conduct Authority (FCA) opened two parallel consultations seeking industry input on decentralised finance (DeFi) and the boundaries of its forthcoming cryptoasset regime.
The moves form part of the regulator’s ongoing preparation for the full crypto framework, which is scheduled to take effect on 25 October 2027 under the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026.
The first consultation, GC26/7, proposes non-Handbook guidance aimed at FCA-regulated firms that use or facilitate access to DeFi protocols.
Rather than introducing a new rulebook, the guidance seeks to clarify how existing requirements apply when firms deliver services through highly automated, distributed-ledger-based systems.
It concentrates on operational resilience under SYSC 15A, compliance and financial crime controls under SYSC 6, and obligations under the Money Laundering Regulations.
The FCA observes that DeFi’s open, interoperable and often intermediary-light design can heighten operational and financial-crime risks for both firms and their clients.
The draft guidance outlines the current risk landscape and offers illustrative examples of steps firms may consider to manage those risks. Its stated objectives are to safeguard consumers, maintain market integrity and support effective competition.
Firms are encouraged to read GC26/7 alongside the second consultation, CP26/36, which addresses the cryptoasset regulatory perimeter following recent legislative changes.
The draft Cryptoassets (Miscellaneous Amendments) Regulations 2026 introduce several new exclusions from regulated activities.
These cover, among other matters, temporary settlement arrangements, temporary holding of UK qualifying stablecoins in connection with payment transactions, arrangements involving the backing assets of such stablecoins, proprietary trading where a person is not providing a service to another (or is acting as a market maker on a qualifying cryptoasset trading platform), and technical services that merely enable access to services offered by a third party or to a decentralised protocol.
CP26/36 is intended to help firms determine whether they require FCA permission once the regime begins, thereby reducing the chance of inadvertent breaches.
The regulator has acknowledged that the timing of the latest statutory instrument has created uncertainty for a limited number of firms.
In certain circumstances involving the technical-services exclusion, it has indicated it will show forbearance, allowing additional time to complete aspects of an application provided an otherwise complete submission is made during the application window.
That window for existing UK cryptoasset businesses opened on 30 September 2026 and closes on 28 February 2027.
Both consultations close on 18 November 2026, with the FCA aiming to publish final guidance in January 2027 after considering responses.
The perimeter guidance emphasises that the regime is technology-neutral: the use of software, smart contracts, distributed-ledger technology or distributed governance does not, by itself, determine whether a person is carrying on a regulated activity that requires authorisation.
Earlier policy work has indicated that rules will generally apply where an identifiable controlling entity can be identified.
Industry groups have welcomed the opportunity to comment while stressing the importance of proportionality.
The UK Cryptoasset Business Council has described DeFi as one of the most innovative segments of financial services and urged the FCA to establish clear perimeter rules and balanced expectations so that responsible innovation can remain in the United Kingdom rather than migrate elsewhere.
The consultations arrive against the backdrop of a broader crypto roadmap that has already produced final rules for activities such as trading platforms, intermediaries, staking, and lending and borrowing. Together, the new guidance exercises are intended to give firms greater clarity as they prepare for the 2027 implementation date.
