The UK Financial Conduct Authority announced two consultation periods this week detailing how DeFi protocols can meet anti-money laundering requirements and defining which crypto assets fall outside its regulatory perimeter.
The first consultation clarifies how existing FCA money laundering and financial crime rules apply to decentralized finance. The second outlines specific crypto asset exclusions from regulation, reflecting recent legislative changes.
In a Wednesday notice, the FCA said its proposed DeFi guidance clarifies existing rules rather than establishing new policy. The consultations arrive weeks after the FCA opened applications for its new crypto regulatory regime on Sept. 30, with a Feb. 28, 2027, deadline for companies to seek compliance.
Enforcement of the comprehensive framework begins in October 2027. The regime includes specific provisions for stablecoin reserve asset holding arrangements.
The UK Cryptoasset Business Council said DeFi represents some of the most innovative parts of financial services. "The UK can still strike the right balance—clear perimeter rules, expectations that stay proportionate, and a framework that lets responsible innovation take root here instead of migrating elsewhere," the council said. "The FCA needs to get this right."
Defining crypto asset exclusions narrows the scope of the upcoming regime and distinguishes assets or activities falling outside direct FCA oversight. Clarity on which protocols and tokens qualify for exclusions will shape how DeFi entities structure compliance and determine which services require licensing.
