FCA Consults On Where New UK Crypto Rules Should And Should Not Apply

TL;DR: The FCA’s CP26/36 consultation proposes guidance on regulatory exclusions for settlement, stablecoin handling and certain technical crypto services. Crypto businesses preparing for the UK’s expanded regulatory regime have a new document to digest. The Financial Conduct Authority opened consultation CP26/36 on October 21, addressing an increasingly difficult question: where does regulated financial activity end and ordinary blockchain software begin? The paper focuses on exemptions introduced by recent legislative changes. Among the examples are temporary settlement arrangements, qualifying stablecoin holding in payment processing, some proprietary trading activities and technical services that simply provide access to another provider or a decentralised protocol. For a developer running a software interface, that distinction could matter just as much as it does for an exchange or custodian. Being treated as an intermediary arranging a transaction may impose a very different permission burden from providing technical access alone. The FCA is not declaring every DeFi front end exempt. Whether an exclusion applies depends on the actual activities and facts, and the document is