The UK needs a workable route to regulated DeFi access
The UK’s 2027 crypto rules risk a de facto ban on regulated firms providing access to DeFi, argues Coinbase’s European policy head Katie Harries.
Asanat Analysis — Why it matters
The UK's incoming 2027 regulatory framework threatens to create a regulatory arbitrage that pushes DeFi access offshore rather than into compliance. Coinbase's warning signals a broader tension: jurisdictions attempting to gate-keep DeFi through traditional intermediaries risk ceding market share to less-regulated venues. This mirrors similar regulatory friction in the EU (MiCA) and US, where policymakers struggle to reconcile decentralized protocol governance with fiduciary responsibility frameworks built for centralized custodians.
The practical issue centers on how a regulated entity can legally facilitate user access to non-custodial smart contracts that the firm doesn't control or underwrite. Current UK FCA guidance doesn't clearly permit this path, forcing a binary choice: regulated firms abandon DeFi services entirely, or users migrate to unregulated platforms. This creates perverse incentives—the most compliant actors withdraw, leaving market share to less-scrupulous competitors. Singapore and Switzerland have begun carving out safe harbors for DeFi access by regulated firms; the UK's 2027 rules may need similar calibration to remain competitive.