The FCA DeFi consultations opened on October 21, 2026, seeking feedback on how existing compliance duties apply to decentralized finance and which crypto activities could fall outside authorization requirements. The two papers precede the United Kingdom’s cryptoasset regime, scheduled to take effect on October 25, 2027.
Key Takeaways
- Firms using decentralized protocols would remain responsible for meeting applicable compliance obligations.
- Proposed exclusions cover certain settlement, payment, own-account trading and technical-access activities.
- Responses close on November 18, 2026, with final guidance expected in January 2027.
Table of Contents
- FCA DeFi consultations keep responsibility with firms
- Proposed exclusions depend on the activity, not the technology
- Application timing matters for transitional access
- Conclusion
FCA DeFi consultations keep responsibility with firms
The first paper, GC26/7, addresses financial services firms that use decentralized protocols or provide customers with access to them. The Financial Conduct Authority’s position is that smart contracts and automated systems do not remove a firm’s responsibility for compliance.
Rather than proposing a separate DeFi rulebook, the guidance explains how existing requirements apply to decentralized technology. It covers operational resilience under SYSC 15A, financial crime controls under SYSC 6 and obligations under the Money Laundering Regulations.
The existing FCA Handbook financial crime requirements provide background to that approach: applicable firms must maintain systems and controls to identify, assess, monitor and manage money-laundering risk, proportionate to their activities. The Handbook also notes that firms may have separate obligations under the Money Laundering Regulations.
The regulator highlighted operational failures and financial crime risks in open, interoperable protocols, particularly where users interact without traditional intermediaries. For firms, the practical distinction is between using decentralized infrastructure and transferring responsibility to it; the proposed guidance does not treat the two as equivalent.
| Item | Details |
|---|---|
| Consultations opened | October 21, 2026 |
| Feedback deadline | November 18, 2026 |
| Final guidance | Expected in January 2027 |
| Authorization application window | September 30, 2026, to February 28, 2027 |
| New cryptoasset regime | Scheduled to take effect on October 25, 2027 |
Proposed exclusions depend on the activity, not the technology
The second consultation, CP26/36, examines the boundary of the authorization regime. Draft amendments through the Cryptoassets (Miscellaneous Amendments) Regulations 2026 propose exclusions for specified activities rather than a blanket exemption for decentralized services.
Those exclusions include temporary settlement arrangements, temporary holdings of qualifying UK stablecoins during payment transactions, and proprietary trading where a business acts for itself without serving another party.
Qualifying market-making on regulated cryptoasset trading platforms and technical services limited to enabling access to another company’s services are also within the proposed exclusions.
The FCA stressed that smart contracts, distributed ledgers or decentralized governance do not by themselves decide whether authorization is required. Businesses therefore need to distinguish the activity they perform from the technology used to deliver it. The exclusions remain proposals, not finalized permissions.
Application timing matters for transitional access
Existing UK cryptoasset businesses have been able to apply for FCA authorization since September 30, 2026. Firms applying within the specified window may continue providing eligible crypto services while their applications are assessed.
The FCA acknowledged uncertainty caused by the latest legislative amendments and said affected businesses could receive additional time to complete certain application requirements. That possibility is distinct from a general extension of the application window.
Businesses that miss the February 28, 2027, deadline risk losing access to the transitional savings provision. Final guidance expected in January would leave roughly nine months before the new regime begins.
Conclusion
The next confirmed milestone for the FCA DeFi consultations is the November 18, 2026, response deadline. The final guidance expected in January 2027 will clarify the regulator’s approach before the authorization window closes and the new regime takes effect.
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