Six crypto and blockchain organizations are urging the UK Financial Conduct Authority to narrow proposed cryptoasset perimeter guidance so that neutral blockchain infrastructure is not treated as regulated financial intermediation. In a joint comment letter on the FCA’s Consultation Paper CP26/13, Aptos Labs, the Avalanche Policy Coalition, the Cardano Foundation, the IOTA Foundation, the Sui Foundation and the Stellar Development Foundation argued that the UK regime should focus on custody, control and intermediary conduct rather than the technical base layers that enable networks to function.
Crypto Groups Press FCA on Infrastructure Rules
The joint letter, submitted to the FCA’s cryptoasset policy team, welcomes the regulator’s effort to clarify the perimeter for cryptoasset activities but says the current drafting needs sharper boundaries. The organizations frame their response around a principle they say has already been articulated by HM Treasury: authorisation should apply where there is a “sufficiently controlling party” involved in the relevant activity. In their view, that concept should prevent regulation from extending to actors that provide technical infrastructure without controlling assets, exercising discretion or standing between counterparties.
The industry groups put the point directly in the letter: “Blockchain networks rely on infrastructure providers, including validators, developers, and technical service providers. These actors are not providers of financial services. They do not custody assets, exercise discretion, or act between counterparties.” The letter adds that these participants “provide infrastructure for users and participants,” rather than acting as transactional agents or financial counterparties.
That distinction was also emphasized publicly by IOTA in an X post supporting the submission alongside Aptos Labs, Avalanche Policy Coalition, Cardano Foundation, Sui Foundation and Stellar. “Infrastructure is not intermediation,” IOTA wrote, adding that UK digital asset markets should regulate “custody and control” rather than “the neutral base layers that run them.” The Avalanche Policy Coalition similarly said on X that the regulatory perimeter should focus on “actual financial intermediation, not neutral infrastructure,” including clearer treatment of arranging, staking and infrastructure providers.
Staking and Arranging Tests Draw Industry Push
A central concern in the letter is the FCA’s proposed interpretation of “arranging deals in qualifying cryptoassets.” The groups say the guidance risks going beyond traditional intermediary activity if merely “helping” a transaction occur is enough to bring a technical service provider within scope. They argue that APIs, user interfaces, message transmission tools and other connectivity services may touch a transaction flow without controlling whether a trade occurs, how it is executed or which counterparty is selected.
The letter states: “In modern digital systems, many actors may interact with a transaction lifecycle without exercising legal or technical control over whether the transaction occurs, how it is executed, or which counterparties are engaged. For example, API providers may generate transaction data that is ultimately signed and broadcast solely by the user. User interfaces may display execution pathways without influencing or committing the transaction.” The groups argue that the decisive act in such cases remains with the user through cryptographic signing and submission, which they say is inconsistent with a meaningful concept of intermediation.
The submission also asks the FCA to separate staking models based on function and risk. It says custodial staking or staking-as-a-service arrangements involving control, intermediation and counterparty risk can properly sit inside the regulatory perimeter, while protocol-level and non-custodial staking should not be treated the same way. “Staking services that involve control, intermediation, and counterparty risk appropriately fall within the regulatory perimeter. They are akin to the other types of financial services the FCA regulates. On the other hand, non-custodial staking is defined by user control of private keys, signing and broadcasting transactions.” The letter was signed by legal and policy executives including Alex Mittendorf, general counsel; Lee A. Schneider, general counsel; Nicolas Jacquemart, chief legal officer; Tom Jansson, head of legal and regulatory affairs; Gabriel Feinberg, general counsel; and Candace Kelly, chief legal and policy officer.
The groups’ position is that the FCA can protect investors and market integrity without drawing validators, software developers, APIs, interfaces and other neutral infrastructure into the same category as custodians, brokers or trading intermediaries. Their proposed approach would anchor the UK perimeter in custody, control, discretion and counterparty risk, while leaving self-directed protocol participation and technical network operation outside regulated activity. The FCA consultation process will determine whether those distinctions are reflected in the final perimeter guidance for UK cryptoasset markets.
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