U.S.-based DeFi group urges UK FCA to anchor crypto rules to ‘unilateral control’
DeFi Education Fund says developers of non-custodial protocols should not be regulated as intermediaries under the U.K.’s proposed crypto regime.
Make us preferred on GoogleWhat to know:
- The DeFi Education Fund tells FCA that regulatory obligations should apply only where there is “unilateral control” over user assets or transactions.
- The U.S.-based group argues non-custodial DeFi developers should not be treated like centralized intermediaries.
- DEF warns that applying trading platform and prudential requirements and full money-laundering laws to automated protocols would be structurally incompatible.
The DeFi Education Fund (DEF) has urged the U.K.’s Financial Conduct Authority to adopt a narrow, functional definition of “control” as it finalizes new rules for crypto asset activities.
The Washington, D.C.-based advocacy group argued that regulatory obligations should hinge on whether an entity has unilateral authority over user funds or transactions, not merely whether it developed or contributed to a decentralized protocol, in a response to an FCA consultation paper shared exclusively with CoinDesk.
“Control should be the determinative factor” of regulatory scope, DEF said, warning that software developers could otherwise be swept into intermediary-style obligations despite lacking custody or transactional authority.
The submission focuses on an area of the consultation which considers how decentralized finance (DeFi) arrangements should be treated under the U.K.’s emerging crypto regime. DEF supports the FCA’s control-based approach in principle but says it must be tied to concrete operational powers, such as the ability to initiate or block transactions, modify protocol parameters or exclude users.
