FCA Unveils Draft Guidance on Decentralised Finance

The Financial Conduct Authority (FCA) has released draft guidance for UK‑regulated firms that interact with, facilitate access to, or provide financial services on decentralised finance (DeFi) platforms. The guidance outlines the regulatory framework under which DeFi activities fall, clarifying that firms are expected to apply existing principles—such as client protection, anti‑money‑laundering obligations, and conduct‑risk standards—to DeFi transactions. Key provisions include a requirement for risk assessments of tokenised assets, guidance on the treatment of smart‑contract‑based deals under FCA’s rules, and an explanation of when a DeFi operator requires FCA registration. The draft also signals the FCA’s willingness to treat DeFi as a “layer‑two” market, meaning standard stress‑testing and capital‑adequacy rules apply. Firms should review the draft to evaluate whether their DeFi‑related activities expose them to new compliance obligations, and consider early engagement with the FCA if substantive implementation changes are required.

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