U.K. FCA Draft Guidance Says Some Crypto Trade Routing May Require Authorization

The U.K. Financial Conduct Authority proposed guidance that could bring some software-driven crypto trade routing within regulated arranging activity, affecting whether apps that select venues for customers need authorization.

The draft interprets an exclusion for technical services under arranging activity rules. Assessing prices or liquidity and choosing where to route an order may indicate that a provider exercises discretion, but no single factor determines the outcome. The analysis depends on how the service is designed and operated.

Some decentralized finance (DeFi) aggregators could fall within the regime, including services that promote best execution. Those features are possible indicators, not automatic triggers, and the FCA has not singled out DeFi aggregators as a category.

Smart contracts, software and distributed governance do not determine whether an activity is regulated. The assessment instead considers the roles of the people involved and the facts of the arrangement.

The broader crypto authorization regime is scheduled to begin Oct. 25, 2027. The Feb. 28, 2027, application deadline applies to existing U.K. cryptoasset businesses seeking to undertake new regulated activities. Some firms already authorized under the Financial Services and Markets Act may need to vary their permissions. The FCA authorization regime for certain cryptoasset activities includes the application timeline.