Isadora Arredondo, Vice President of Global Policy at Hedera and a former official of the UK Financial Conduct Authority, said that the conflict of regulatory priorities and the difference between policy and practice, rather than direct opposition to the sector, were effective in the UK’s failure to achieve the expected momentum in its goal of becoming a crypto asset center.
Policy goal and implementation in the field diverged
In an interview in London, Arredondo explained that although regulatory targets seem ambitious on paper, the same pace cannot be maintained in practice. Arredondo worked within the FCA during and after Brexit. As one of the main institutions overseeing the UK’s financial markets, the FCA also plays a decisive role in crypto regulations.
Arredondo emphasized that there is a big difference between the policy goal and how it is actually implemented, and that the UK’s slow progress in the crypto field is also linked to this divergence.
According to Arredondo, one of the important reasons for this slowdown was that the FCA faced a succession of heavy agendas in the period between 2018 and 2021. First, due to Brexit, the institution had to rewrite many rules according to the new order outside the European Union. Then, with the COVID 19 outbreak, the institution’s focus shifted to crisis management.
After the epidemic period, the effects of high-profile investment collapses such as London Capital & Finance and Woodford Fund came to the fore. It was stated that these developments directed the FCA more strongly towards consumer protection, and crypto assets were increasingly considered within this framework.
Faster process on the corporate side, more challenging process on the startup side
Arredondo argued that the UK’s crypto approach was shaped along two separate lines. Accordingly, while a more forward-thinking and more active attitude is seen in large financial institutions and wholesale market-oriented activities, new ventures and companies focusing on individual investors face longer and more complex permit processes.
He stated that the regulator is more proactive when it comes to contact with crypto on the corporate side, while small companies are tried to fit into the existing rules and this lengthens the authorization process.
It was stated that while the European Union’s MiCA framework imposes specific rules on crypto assets, the UK largely prefers to use existing regulatory structures. It was noted that this approach can lead to repeated reviews by different teams and long application processes, especially for new companies. Regulations regarding crypto in the UK are expected to come into force in October 2027.
The Bank of England also follows a more cautious line regarding stablecoins. In the new framework announced after the interview, a temporary issuance guardrail was adopted, replacing the previously discussed individual and institutional holding limits, which imposes a £40 billion cap on the total circulation of a single systemically important stablecoin.
The next topic in digital money is interoperability
Arredondo, who monitors the approach of governments and central banks to digital money in his role at Hedera, said that in the next stage, the main issue will be interoperability rather than technology. According to him, the industry has developed different blockchain networks, stablecoins and digital currency projects for years; but focused less on how these systems would work in harmony with common standards.
Mini dictionary: CBDC refers to digital currency issued directly by central banks. Interoperability refers to the ability of different networks, payment systems and digital asset infrastructures to transfer data and value with common standards.
Arredondo cited the European Union as an example that allows stablecoins, tokenized bank deposits and central bank digital currencies to co-exist under the same roof. He evaluated the increasing weight of large banks, asset managers and other financial institutions in the crypto field as not a move away from the first ideas of crypto, but rather a transfer of these ideas to mainstream finance.
