UK Crypto Regulation Faces Execution Gap, Says Hedera Policy Executive

The United Kingdom’s ambition to become a leading global crypto hub has been slowed by a disconnect between policy goals and regulatory implementation, according to Isadora Arredondo, Hedera’s Vice President of Global Policy and former Financial Conduct Authority (FCA) official.

Speaking about her experience at the FCA, Arredondo explained that one of the biggest challenges facing the UK crypto industry is the gap between regulatory ambition and real-world execution. While many crypto firms have criticized the FCA for slow approvals and regulatory hurdles, she believes much of the delay resulted from competing priorities rather than hostility toward digital assets.

During her tenure at the FCA between 2018 and 2021, the regulator was heavily focused on Brexit-related rule changes, followed by the economic disruption caused by the COVID-19 pandemic. As resources shifted toward crisis management, crypto regulation became a secondary concern. After the pandemic, the FCA also faced pressure to strengthen consumer protection following major investment scandals, including the collapses of London Capital & Finance and the Woodford Fund.

Arredondo noted that the FCA’s crypto strategy has evolved into a two-track approach. Large financial institutions exploring blockchain technology, tokenization, and digital assets have benefited from initiatives such as the Digital Securities Sandbox. Meanwhile, startups and retail-focused crypto businesses often face lengthy authorization processes and multiple regulatory reviews.

Unlike the European Union’s Markets in Crypto-Assets (MiCA) framework, which introduced dedicated crypto regulations, the UK has largely attempted to integrate crypto activities into existing financial regulations. Despite the challenges, Arredondo argues that operating under the UK’s strict standards can enhance credibility and support long-term business growth. The country’s comprehensive crypto regulations are expected to take effect in October 2027.

Now at Hedera, Arredondo is focused on the future of digital money, including stablecoins, central bank digital currencies (CBDCs), and tokenized deposits. She believes the industry’s biggest challenge is interoperability. While blockchain networks and digital payment systems continue to expand, greater collaboration and standardized frameworks are needed to ensure these technologies work seamlessly together.

Arredondo also supports the increasing involvement of major banks, asset managers, and financial institutions in crypto. Rather than viewing institutional adoption as a departure from crypto’s original vision, she sees it as proof that blockchain innovation is influencing mainstream finance. According to Arredondo, the integration of trusted financial institutions can help strengthen confidence in digital assets while preserving the core principles that have shaped modern monetary systems.