Former FCA policymaker and Hedera Global Policy VP Isadora Arredondo says the UK’s crypto strategy is being held back by a persistent gap between high-level ambition and real-world regulatory execution.
Drawing on her experience at the UK Financial Conduct Authority (FCA), where she worked on policy during Brexit and later on crypto regulation, Arredondo brings an insider view of how Britain’s regulatory machine operates from the inside.
She argues that the UK’s struggle to position itself as a global crypto hub is less about intent and more about how policy gets translated into action.
In an interview with CoinDesk in London, she described discovering “the world that separates policy ambition from policy execution,” adding that there remains a “great divide” between designing regulation and actually implementing it in practice.
The conversation came shortly before the Bank of England unveiled updated stablecoin rules, which moved away from earlier proposals to cap individual holdings. Instead, the central bank introduced a broader systemic safeguard, limiting total circulation of any single systemic stablecoin to £40 billion ($50.6 billion).
The UK’s crypto ambitions vs regulatory reality
Arredondo traces today’s regulatory slowdown back to her FCA tenure between 2018 and 2021, a period shaped by multiple overlapping shocks.
She disputes the view from many crypto firms that slow approvals reflect hostility toward the sector, arguing instead that internal priorities and external crises shaped the regulator’s pace.
First came Brexit, which forced a large-scale rewrite of financial rules. Then the COVID-19 pandemic pushed the FCA into crisis-management mode, shifting attention toward emergency lending schemes and financial stability.
During that period, crypto moved from a niche perimeter concern to a secondary priority, she said.
After the pandemic, the regulator faced fallout from major failures such as London Capital & Finance and the Woodford Fund, further strengthening its consumer protection focus.
As a result, crypto has increasingly been assessed through a stricter risk lens under FCA leadership.
Two-track regulation: institutions vs startups
Arredondo says the FCA has effectively developed a dual approach to crypto regulation.
On one side, large institutions benefit from more proactive engagement, including initiatives like the Digital Securities Sandbox and broader exploration of tokenization.
On the other side, smaller crypto firms face a more rigid and time-consuming approval process.
Unlike the EU’s MiCA framework, which introduced dedicated crypto rules, the UK has largely tried to fit digital assets into existing financial regulations.
Arredondo says this leads to longer authorization timelines and repeated scrutiny from multiple internal teams.
While industry participants often criticize these delays, she acknowledges the frustration but defends the outcome, arguing that strict standards ultimately strengthen institutional credibility.
UK crypto regulation is expected to come into force in October 2027.
Beyond the UK: the interoperability problem
Now at Hedera, Arredondo focuses on how governments and central banks are approaching digital money systems.
She says the biggest challenge is not technological innovation, but the lack of coordination between systems.
Despite rapid growth in blockchains, stablecoins, and tokenized finance, she argues that too little attention has been paid to making these systems interoperable.
Instead of isolated innovation, she calls for industry-wide standards that allow different systems to connect and function together.
This issue is becoming more urgent as governments experiment with stablecoins, tokenized deposits, and central bank digital currencies at the same time.
She highlights the European Union as an example of a jurisdiction attempting to accommodate multiple forms of digital money within a single regulatory structure.
Institutional adoption and shifting crypto narratives
The growing presence of banks and large financial institutions in crypto has sparked debate over whether the industry is drifting away from its original decentralization ethos.
Arredondo disagrees with that interpretation.
She argues that institutional adoption reflects the mainstream acceptance of ideas first developed within crypto, rather than their dilution.
In her view, crypto’s early contributions helped surface fundamental questions about money and financial systems, which are now being absorbed into traditional finance.
Rather than a compromise, she sees this evolution as a sign that digital assets are being integrated into the financial system while retaining the core principles that underpin trust in money.
