FCA DeFi guidance: two UK consultations close 18 November

Key takeaways

• The UK Financial Conduct Authority (FCA) published two consultations on DeFi guidance on 21 October 2026: GC26/7, non-Handbook guidance on decentralised finance, and CP26/36, perimeter guidance on the scope of the new cryptoasset regime.
• Both consultations close on 18 November 2026. The FCA's consultation pages say it aims to publish final guidance in January 2027.
• CP26/36 makes clear that using smart contracts, distributed ledger technology or decentralised governance does not, on its own, decide whether a regulated activity is taking place. "True DeFi" is not a statutory concept.
• The paper explains proposed new exclusions, including one for technical services that only give access to a third party's services or to a decentralised protocol.
• The UK cryptoasset regime starts on 25 October 2027. Firms already doing UK cryptoasset business have an application window from 30 September 2026 to 28 February 2027.

What the FCA DeFi guidance consultations cover

The FCA DeFi guidance comes in two consultations published on 21 October 2026: GC26/7 on decentralised finance and CP26/36 on the perimeter of the UK's new cryptoasset regime. Both close on 18 November 2026, and the regime starts on 25 October 2027.

The timing matters. The FCA said in April 2026 that it would consult on DeFi guidance later in the year. These papers deliver on that promise. They arrive while firms are already applying for authorisation under the new regime, which the FCA opened to applications on 30 September 2026.

GC26/7: DeFi guidance for regulated firms

GC26/7 is titled "Decentralised finance guidance (DeFi)". The FCA describes it as non-Handbook guidance. In plain terms, it does not create a new DeFi rulebook. It explains how existing rules apply when a regulated firm provides financial services using DeFi.

According to the FCA's consultation page, the guidance focuses on three sets of obligations:

• Operational resilience under SYSC 15A of the FCA Handbook;
• Compliance, internal audit and financial crime under SYSC 6;
• The Money Laundering Regulations (MLRs).

The paper sets out the FCA's observations on the current DeFi risk landscape and gives illustrative examples of measures firms may consider. The regulator says the aim is to "protect consumers, uphold market integrity and promote effective competition."

The main audience is FCA-regulated firms that use DeFi and fall within SYSC 15A, SYSC 6 or the MLRs. The FCA also lists other interested groups, including unauthorised parties that interact with DeFi, industry bodies, professional advisers, consumer groups and academics.

CP26/36: when does a DeFi project need UK authorisation?

CP26/36, "Cryptoasset perimeter guidance", deals with the bigger question for DeFi teams: who needs permission from the FCA at all. From 25 October 2027, carrying on a regulated cryptoasset activity by way of business in the UK will require authorisation unless an exclusion or exemption applies.

Decentralisation is a spectrum, not a carve-out

According to reporting on the paper by ChainCatcher (republished by KuCoin News) and an analysis by The Industry Spread, the FCA's position is that software, smart contracts, DLT and decentralised governance do not by themselves determine whether a regulated activity is happening. "True DeFi" and "DAO" are not concepts defined in the Regulated Activities Order or the Cryptoassets Regulations. Decentralisation is treated as a spectrum, not as a separate legal framework.

The practical test is about people, not code. The Industry Spread notes that the law regulates a "person", meaning an individual, a company or an unincorporated association. Software and smart contracts are not persons. So the question for any protocol is whether an identifiable person is carrying on a regulated activity, such as operating a trading platform, dealing or arranging deals in cryptoassets, or safeguarding them.

The FCA also reminds readers of the limits of its role. The Industry Spread quotes the paper as saying the regulator "does not have the power to change the perimeter, only to interpret it." The boundary itself is set by legislation passed by Parliament.

Front ends and the technical services exclusion

For many DeFi teams, the most important part is a proposed exclusion for technical services. The FCA's CP26/36 page says the draft Cryptoassets (Miscellaneous Amendments) Regulations 2026 would exclude technical services that only provide access to a third party's services or to a decentralised protocol.

This is narrower than it may sound. According to The Industry Spread's reading of the paper, the exclusion covers only arranging deals in qualifying cryptoassets. It does not cover dealing. It is not available to authorised firms or payment service providers. It does not extend to the financial promotions regime or to the MLRs. The analysis describes it as not a general carve-out for DeFi-related services.

The FCA's page adds a practical point. Firms unsure whether the technical services exclusion applies to them should use the FCA's pre-application support service. If a firm can show that this uncertainty materially affected its application, and it submits an otherwise complete application within the window, the FCA says it will allow extra time to deal with the arranging permission part.

Proposed exclusions in CP26/36

Source: FCA, CP26/36 consultation page, published 21 October 2026.

Key dates for the UK crypto regime

One note on timing: The Industry Spread reports that the CP26/36 document itself refers to final guidance in spring 2027, while the FCA's web pages say January 2027. The FCA has not publicly explained the difference.

What it means for DeFi teams serving UK users

The message from the two papers is that the label "decentralised" will not settle the question of authorisation. A team that runs a front end, holds admin powers or arranges deals for UK users will need to look at what it actually does, not at how it describes itself. Where an identifiable person carries on a regulated activity, the FCA's view is that the regime can apply.

The timeline is tight. The consultations close on 18 November 2026, but the application window for existing businesses that want the savings provision closes on 28 February 2027. Final guidance may arrive only weeks before that deadline. That is why the FCA has offered extra time where uncertainty over the technical services exclusion materially affected an application.

For regulated firms such as banks, brokers and payment firms, GC26/7 matters too. It signals that the FCA expects DeFi exposure to be built into operational resilience planning and financial crime controls, using rules that already exist.

The UK approach sits alongside moves in other markets. In the US, banking regulators are writing rules for stablecoins, as covered in our report on the OCC's final GENIUS Act rule. Readers new to the sector can also see our explainers on tokenized stocks and 24/7 trading and how to read on-chain data, and our report on yen stablecoin payments in Korea.

What is still unknown

Several points will only become clear after the consultation. It is not yet known how the FCA will change the draft guidance in response to feedback. The amending regulations that create the new exclusions are still in draft. And the exact wording of the final guidance will decide how much room front-end providers have under the technical services exclusion.

Responses can be sent through the FCA's online forms or by email until 18 November 2026.

Sources

• FCA: CP26/36 Cryptoasset perimeter guidance (21 October 2026)
• FCA: GC26/7 Decentralised finance guidance (DeFi) (21 October 2026)
• FCA: CP26/36 consultation paper (PDF)
• FCA: New regime for cryptoasset regulation
• FCA press release: FCA consults on guidance for UK's future crypto regime (15 April 2026)
• The Industry Spread: CP26/36 sets the tests for cryptoasset exclusions
• Crypto Briefing: UK Financial Conduct Authority opens consultations for DeFi guidance
• KuCoin News (ChainCatcher): FCA publishes draft DeFi guidance

This article is for information only and is not investment advice.