The United Kingdom's Financial Conduct Authority (FCA) has opened two consultation periods covering how companies working with decentralized finance (DeFi) can comply with its guidance, alongside proposed exclusions for certain crypto assets following what the country's financial regulator described as “recent legislative changes.”

Consultations are a standard step in the FCA's rulemaking process, giving firms and other stakeholders an opportunity to respond before the regulator settles on a final approach — and the two documents together sketch out how the UK intends to treat DeFi activity and carve out parts of the crypto market from its new regime.

In a notice published on Wednesday, the FCA launched a consultation aimed at helping DeFi companies comply with the financial watchdog's rules on money laundering and financial crime, setting out how the regulator expects its existing to apply to firms active in the sector. The guidance consultation has been published on the FCA's website. The agency also announced a separate consultation on “exclusions from cryptoasset regulation,” citing recent legislation in the country.

Exclusions of this kind determine which crypto activities fall outside the regulator's perimeter — and, by extension, which businesses need to seek authorization — a question that takes on added weight now that the FCA has opened its application window for the new regime.

With respect to DeFi, the FCA said the proposed guidance “seeks to clarify existing rules rather than establish new policy.”

“DeFi sits among the most innovative parts of [Financial Services],” the UK Cryptoasset Business Council, an industry body, said in response to the consultations. “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 FCA needs to get this right.”

The consultation on exclusions relates to the FCA's previously revealed regulatory regime, which covers stablecoin holding arrangements and reserve assets — the pools of assets backing stablecoins, tokens designed to hold a steady value — and is expected to be enforced starting in October 2027. The regulator opened applications for crypto entities on Sept. 30, setting a Feb. 28, 2027 deadline for companies seeking to be in compliance with the new rules.

The twin announcements came just weeks after the FCA began accepting applications from companies under its new crypto regulatory regime, marking another step in the United Kingdom's effort to establish a comprehensive regulatory framework for cryptoasset businesses. With both consultations newly opened, the next markers for firms are the Feb. 28, 2027 compliance deadline and the expected start of enforcement in October 2027.

Related: UK sanctions three crypto exchanges tied to Russian illicit funds

Source: Cointelegraph