A former senior Financial Conduct Authority official says Britain has made meaningful progress positioning itself as a crypto hub, but warns that a significant gap between regulatory ambition and execution has slowed tangible results for startups and retail-focused firms. Isadora Arredondo, who worked at the FCA from 2018 to 2021 and now serves as vice president of global policy at Hedera (HBAR), told CoinDesk in a London interview that the disconnect between policy design and on-the-ground implementation represents the core challenge facing the UK's digital asset sector.

Market Context

The UK has positioned itself as a potential global crypto hub, with policymakers announcing various initiatives to attract digital asset businesses. However, regulatory progress has been uneven across different segments of the market. The Bank of England recently pivoted on stablecoin policy, replacing a proposal to cap fiat-pegged stablecoins held by individuals and businesses with a macro-level temporary issuance guardrail that caps total circulation of any single systemic stablecoin at £40 billion ($50.6 billion). Meanwhile, the EU's Markets in Crypto Assets (MiCA) framework has created dedicated crypto-specific rules, providing an alternative model for digital asset regulation.

Analysis

Arredondo argues the FCA has developed a split approach to crypto: proactive and forward-looking engagement with large institutions, contrasted against lengthy authorization processes for smaller startups operating under legacy regulatory structures rather than purpose-built crypto frameworks. She points to events during her tenure that shaped the regulator's priorities, including Brexit-related rulebook rewrites and COVID-19 crisis management that shifted organizational focus toward banking responses and forbearance measures. High-profile investment failures, including London Capital & Finance and the Woodford Fund collapse, pushed the FCA toward a stronger consumer protection stance under CEO Nikhil Rathi, with crypto increasingly viewed through that lens.

On the wholesale side, Arredondo credits the regulator with initiatives like the Digital Securities Sandbox and hands-on engagement with financial institutions exploring tokenization. She sees this institutional approach as quite progressive. However, she acknowledges the picture differs substantially for smaller firms facing repeated reviews from different teams under existing financial regulations rather than a dedicated framework like MiCA.

Arredondo also highlighted interoperability as a critical gap: while sophisticated blockchain solutions exist, coordinated standard-setting across networks remains underdeveloped. She pointed to the EU's approach allowing stablecoins, tokenized bank deposits and central bank money to coexist under one framework as a potential model worth watching.

Key Numbers

- £40 billion ($50.6 billion): Cap on total circulation for any single systemic stablecoin under Bank of England's new temporary issuance guardrail

- October 2027: Deadline when UK crypto regulations are set to fully take effect

- 2018-2021: Arredondo's tenure at the FCA during Brexit and early crypto policy work

What to Watch

Whether the FCA accelerates authorization processes for smaller crypto firms ahead of the 2027 implementation deadline. Monitor how institutions navigate the Digital Securities Sandbox and whether wholesale crypto activity translates into broader market participation. The Bank of England's macro-level stablecoin guardrail will be tested as systemic stablecoins approach the £40 billion threshold.

How interoperability standards develop across blockchains, stablecoins and CBDCs could shape the next phase of digital money adoption globally.