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【Coinbase UK Proposed Crypto Rules May Effectively Block Access to Regulated Platforms DeFi】

Coinbase European Policy Director Katie Harries wrote that the UK Financial Conduct Authority (FCA)’s proposed cryptoasset regulatory rules may require regulated platforms to execute customer orders only on FCA-authorised trading venues, thereby restricting users’ access to decentralised finance (DeFi) protocols through compliant platforms. As decentralised protocols generally have no entity able to apply for regulatory authorisation, the rules could prevent regulated platforms from providing DeFi access services, creating a de facto ban. The relevant crypto regulatory regime is expected to take effect from October 25, 2027. Harries believes that comprehensively restricting DeFi access would not eliminate the activity, but could instead push more transactions into channels that regulators find difficult to monitor effectively. She urged FCA to adopt an approach of “regulating access points rather than blocking the technology,” allowing compliant platforms to provide DeFi access services provided that they clearly inform users of the risks, obtain users’ consent, and assess protocol operational and governance risks. She also noted that the EU and US are exploring the combination of traditional finance with DeFi infrastructure, and that the UK should leave room for such innovation.