Britain's Financial Conduct Authority has proposed guidance that could determine whether crypto trading apps, wallet interfaces and decentralized-finance aggregators need permission to arrange transactions. The consultation, published October 21, focuses on a new exclusion for technical services that merely let customers access an authorized provider or a decentralized protocol. The regulator's central message is that an interface is judged by what it does, not by whether its decisions are automated or described as decentralized.

Neutral access and active routing are treated differently

The draft says an operator is more likely to remain within the technical-services exclusion when a customer initiates the instruction, chooses the provider or protocol and sets the transaction parameters. The interface should transmit the instruction without selecting, recommending or ranking counterparties, liquidity sources or execution routes. An app does not lose the exclusion simply because it adds useful features, but its role must remain non-substantive and non-discretionary when the service is assessed as a whole.

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The position becomes less certain when software shapes how a trade happens. The FCA lists selecting venues, deciding when or in what order an instruction is sent, modifying instructions, filtering options and choosing routes as signs that an operator may be exercising judgment. Routing based on price, liquidity, execution speed, transaction cost, counterparty risk or likely outcome can therefore move an app closer to regulated arranging. Promises of best execution or an optimized result may also point in that direction.

Automation does not settle the question

The regulator explicitly rejects a simple algorithm exemption. Predetermined software can apply choices previously made by its operator, and an algorithm can select among alternatives using criteria the operator controls. Conversely, objective rules that ordinarily produce the same output from the same input may support a non-discretionary characterization. Neither factor is decisive on its own. The FCA says even a non-discretionary function can still amount to substantive participation if it materially helps bring about a transaction.

DeFi labels do not remove identifiable operators

The consultation applies the same substance-over-label approach to decentralized arrangements. Software and smart contracts are not themselves legal persons, but people or companies deploying, maintaining or governing them may still carry on regulated activities. Open-source code, token voting, automatic execution or a permissionless label does not automatically make an arrangement a decentralized protocol. The FCA would examine control, ongoing maintenance, remuneration and how the service is presented to users.

The guidance remains open to change

The new UK crypto perimeter is scheduled to take effect on October 25, 2027. The FCA says the recent legislation created uncertainty for a small group of firms and that it may allow extra time to address arranging-permission gaps when that uncertainty materially affected an otherwise complete application. This is limited forbearance rather than a blanket waiver, and affected firms are expected to use the regulator's pre-application support service.

Comments on the draft close November 18, 2026. Until the FCA publishes its final guidance, operators cannot treat the examples as a definitive ruling on a particular product. The practical dividing line will depend on the full transaction flow: who chooses the destination, who controls the routing criteria, how options are presented and whether the interface takes responsibility for the outcome. For aggregators that compete by finding an optimized path across liquidity venues, those design decisions may become licensing questions rather than purely technical choices.

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