UK FCA consults on non-Handbook guidance on DeFi

The UK Financial Conduct Authority (FCA) has published a guidance consultation (GC26/7) on decentralised finance (DeFi). The FCA is consulting on non-Handbook guidance to help firms understand how existing operational resilience and financial crime requirements may apply when they provide financial services using, or interacting with, DeFi. The proposed guidance is primarily intended for FCA-authorised firms that use or interact with DeFi as part of their regulated activities, including firms carrying on future regulated cryptoasset activities. The proposed guidance provides observations on the current risk landscape and illustrative examples of measures firms may wish to consider when designing or enhancing their systems and controls. It explains how firms should assess and manage DeFi risks in the context of the FCA's operational resilience framework under SYSC 15A, including through mapping, scenario testing, communication strategies and third-party arrangements. It also addresses financial crime risks and how firms should consider relevant obligations under SYSC 6 and the Money Laundering Regulations 2017, including in relation to risk assessments, systems and controls, customer due diligence, ongoing monitoring, suspicious activity reporting and the Travel Rule.

The FCA emphasises that the guidance does not create new regulatory requirements and that firms remain responsible for complying with existing legal and regulatory requirements when using or interacting with DeFi. Where they cannot do so adequately, firms are reminded that they should consider whether the activity is appropriate for their business and clients. The deadline for responses is 18 November, with the final guidance expected in Q1 2027.

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