The U.K. Financial Conduct Authority (FCA) has issued draft guidance clarifying when DeFi-related interfaces may require authorization in the United Kingdom. According to ChainCatcher, the FCA’s October 21 consultation paper CP26/36, titled “Guidance on the Regulatory Perimeter for Cryptoassets,” explains how to assess whether activities require authorization when a business model involves some degree of decentralization.

The FCA said that using software, smart contracts, distributed ledger technology, distributed governance or other technical arrangements does not by itself determine whether an activity is regulated and requires authorization. Automation describes how a function is performed; it does not determine whether that function is part of a regulated activity. “Genuine DeFi” is not a statutory concept under the Regulated Activities Order or the cryptoasset regulations, and decentralization exists on a spectrum rather than forming a separate regulatory framework.

The FCA also published consultation paper GC26/7, which addresses how regulated firms should manage DeFi risks, particularly operational resilience and financial crime, and gives examples of measures firms could consider. The consultation period for both papers closes on November 18, and the FCA plans to publish final guidance in January 2027. New rules bringing additional cryptoasset activities within the regulatory perimeter take effect on October 25, 2027. Firms seeking to continue those activities must submit authorization applications by February 28, 2027.