GC26/7: UK Financial Conduct Authority consults on decentralised finance (DeFi) guidance - Freshfields
The UK Financial Conduct Authority (FCA) launched GC26/7 on 21 October 2026, a consultation on proposed guidance for firms using decentralised finance (DeFi).
The consultation focuses on how existing operational resilience and financial crime requirements apply when firms interact with or provide services through DeFi. The FCA is not proposing a new regulatory framework but expects firms to meet the same regulatory outcomes as in traditional financial services.
DeFi refers to financial services like trading, lending and borrowing provided through distributed ledger technology rather than traditional intermediaries. It relies on protocols and smart contracts supported by blockchain networks, cloud providers, oracles, bridges, and client-facing wallets.
Risk Assessment
The FCA seeks views on whether it has correctly identified operational resilience and financial crime risks associated with DeFi. For firms within scope of SYSC 15A, the underlying requirements remain the same, but the guidance focuses on how they apply when important business services depend on decentralised infrastructure.
Using DeFi does not change a firm's responsibility for managing the risks associated with the services it provides.
Compliance Challenges
The FCA identifies several vulnerabilities in DeFi that make compliance more challenging, including pseudonymity, cross-chain complexity, and reliance on third-party infrastructure. Firms are expected to reflect these vulnerabilities in their risk assessments and ensure sufficient visibility over transactions.
Firms have until 18 November 2026 to respond to the consultation. Those applying under the new cryptoasset regime should reflect GC26/7 in their applications before the authorisation window closes on 28 February 2027.
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