U.S. DeFi organizations call on the UK FCA not to consider non-custodial protocol developers as intermediaries

Odaily Planet Daily News: The U.S. DeFi organization DeFi Education Fund (DEF) has suggested that the FCA adopt a functional “control” definition when formulating new regulations for digital assets, limiting regulatory responsibility to entities that have sole control over user funds or transactions, rather than those involved solely in the development or contribution to decentralized protocols. DEF emphasizes that regulation should focus on specific operational capabilities, such as initiating or stopping transactions, modifying protocol parameters, or excluding users; otherwise, software developers could be mistakenly classified as intermediaries. DEF also pointed out that it is inappropriate to apply prudential, reporting, and access requirements designed for centralized trading platforms to non-custodial automated protocols, and stated that decentralized protocols have advantages in transparency and combating illegal financial activities. This recommendation responds to the UK Financial Conduct Authority’s (FCA) consultation on how DeFi can be incorporated into its digital asset framework. DEF supports a control-based principle but emphasizes that it must be linked to actual operational authority. (CoinDesk)