UK Financial Conduct Authority proposes new crypto licensing rules

The UK’s Financial Conduct Authority (FCA) has issued draft guidance suggesting that cryptocurrency trading applications may require regulatory authorization if their software actively selects trade routes.

Under the proposed rules, which are set to take effect in October 2027, applications that use algorithms to choose trading venues or transaction paths based on factors such as price, liquidity, cost, or execution speed may be classified as arranging crypto deals. This interpretation could bring decentralized finance (DeFi) aggregators and automated trading interfaces under the UK’s licensing regime.

The FCA is currently focusing on a technical-services exemption designed to protect software providers that merely connect customers to third-party platforms without influencing execution. However, the regulator noted that interfaces which evaluate liquidity sources, recommend venues, or determine execution timing based on counterparty risk or expected outcomes may no longer qualify for such exemptions.