Former FCA policymaker and Hedera Global Policy VP Isadora Arredondo says the UK’s crypto strategy is being constrained by a persistent mismatch between policy ambition and on-the-ground execution.

Drawing on her experience at the UK Financial Conduct Authority (FCA), where she worked through Brexit-era reforms and later on crypto regulation, she offers an insider’s view of how regulatory intent often loses momentum during implementation.

In her assessment, the UK’s struggle to establish itself as a leading crypto hub is less about lacking vision and more about the difficulty of translating that vision into consistent regulatory action.

Speaking to CoinDesk in London, Arredondo said she had not previously grasped “the world that separates policy ambition from policy execution,” describing it as a “great divide” between what regulators aim to achieve and what is actually delivered.

The discussion took place shortly before the Bank of England introduced revised stablecoin rules, replacing earlier proposals that would have capped individual holdings with a broader systemic limit of £40 billion ($50.6 billion) per stablecoin.

UK crypto policy: ambition meets execution

Arredondo links today’s regulatory posture to her FCA experience between 2018 and 2021, a period marked by overlapping political and economic disruptions.

She rejects the idea that the FCA’s approach reflects hostility toward crypto, arguing instead that institutional overload and external crises slowed progress.

Brexit forced a major rewrite of regulatory frameworks, followed by the COVID-19 pandemic, which shifted priorities toward crisis management and financial stability.

During that period, crypto became a lower priority as the regulator focused on emergency lending and banking support measures.

Afterwards, high-profile failures such as London Capital & Finance and the Woodford Fund further reinforced a stricter consumer protection stance.

Together, these events helped shape a more cautious regulatory framework in which crypto is viewed primarily through a risk-management lens.

A split regulatory model

Arredondo says the FCA has effectively developed two parallel approaches to crypto oversight.

Large institutions tend to benefit from more proactive engagement, including sandbox initiatives like the Digital Securities Sandbox and broader experimentation with tokenization.

Smaller crypto firms, however, often face slower approvals and more fragmented regulatory scrutiny.

Unlike the EU’s MiCA regime, which created a dedicated crypto framework, the UK has largely attempted to regulate digital assets through existing financial rules.

Arredondo argues this results in longer authorization timelines and repeated assessments across multiple regulatory departments.

While she acknowledges frustration from industry participants, she maintains that the UK’s strict standards ultimately strengthen credibility and market trust.

Full regulatory implementation is expected in October 2027.

The bigger challenge: interoperability

Now at Hedera, Arredondo focuses on how governments and central banks are approaching digital money systems.

She says the key issue is not a lack of innovation, but the absence of interoperability across competing platforms.

Despite rapid development in blockchain networks, stablecoins, and tokenized financial instruments, she argues these systems remain largely disconnected.

Rather than isolated experimentation, she calls for coordinated standards that allow different systems to interact seamlessly.

This challenge is becoming more urgent as policymakers explore 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 integrate multiple forms of digital money under a unified regulatory structure.

Institutional crypto and shifting narratives

The increasing participation of banks and major financial institutions in crypto has sparked debate over whether the industry is drifting away from its original decentralization ideals.

Arredondo rejects that interpretation.

She argues that institutional adoption reflects the mainstream absorption of ideas that originated within crypto, rather than a departure from them.

In her view, early crypto development raised fundamental questions about money and trust that are now being integrated into traditional finance.

Rather than a compromise, she sees this evolution as evidence that digital asset principles are becoming embedded within the broader financial system.