Former FCA policymaker and Hedera Global Policy VP Isadora Arredondo argues that there is a persistent gap between the UK’s crypto ambitions and how those ambitions are actually implemented in regulatory practice.
Arredondo, who previously worked at the UK Financial Conduct Authority (FCA) on policy during Brexit and later on crypto regulation, offers a dual perspective shaped by both public-sector and industry experience.
She believes the UK’s difficulty in establishing itself as a leading crypto hub stems largely from a disconnect between policy intent and execution on the ground.
Speaking to CoinDesk in London, she said she had not previously realized “the world that separates policy ambition from policy execution,” adding that there remains a “great divide” between designing regulation and implementing it effectively.
The interview took place before the Bank of England announced updated stablecoin rules, which shifted away from earlier proposals to cap individual holdings. Instead, the central bank introduced a broader safeguard limiting the total circulation of any single systemic stablecoin to £40 billion ($50.6 billion).
UK crypto hub ambitions and regulatory constraints
Arredondo points to her FCA experience between 2018 and 2021 to explain why the UK’s goal of becoming a global crypto hub has progressed slowly.
She challenges the common industry view that regulatory delays reflect hostility toward crypto, arguing instead that internal institutional pressures played a major role.
According to her, Brexit required a major overhaul of regulatory frameworks, followed closely by the disruption of the COVID-19 crisis, which redirected the FCA’s focus toward financial stability and emergency response measures.
During that period, she said crypto shifted from being a “perimeter issue” to a secondary concern as regulators prioritized pandemic-related lending and banking support.
Once those pressures eased, the FCA was dealing with fallout from major investment failures such as London Capital & Finance and the Woodford Fund, further reinforcing a stronger consumer protection stance.
As a result, crypto regulation increasingly fell under a risk-focused framework, particularly under FCA CEO Nikhil Rathi.
A two-track regulatory system
Arredondo describes the FCA’s crypto approach as split into two distinct paths: one for large institutions and another for startups and retail-focused firms.
On the institutional side, she highlights initiatives like the Digital Securities Sandbox and broader engagement with tokenization projects as evidence of a proactive stance.
She notes that engagement with large financial players has been relatively forward-looking and collaborative.
However, for smaller crypto firms, the experience has been more complex. Unlike the EU’s MiCA framework, the UK has largely attempted to regulate crypto through existing financial rules rather than creating a standalone regime.
This approach, she says, has resulted in longer approval timelines and repeated scrutiny from multiple regulatory teams.
Crypto firms have frequently criticized these delays, while reports such as those from the Financial Times have highlighted frustration with the Bank of England’s cautious stance on stablecoins and its perceived regulatory bottlenecks.
Despite these criticisms, Arredondo defends the UK’s strict standards, arguing that compliance is difficult but ultimately valuable, as it helps establish stronger institutional credibility.
UK crypto regulations are expected to take effect in October 2027.
Beyond regulation: interoperability challenges
In her current role at Hedera, Arredondo focuses on how governments and central banks are approaching digital money systems.
She emphasizes that the core issue is not technological capability but the lack of interoperability across systems.
While multiple blockchain networks, stablecoins, and tokenization projects have emerged independently, she argues that far less attention has been given to ensuring they can work together seamlessly.
She calls for a shift toward common standards rather than isolated innovation across different platforms.
This challenge is becoming more pressing as governments and financial institutions explore tokenized deposits, stablecoins, and central bank digital currencies simultaneously.
Arredondo points to the European Union as an example of a jurisdiction attempting to integrate multiple forms of digital money under a unified regulatory framework.
Institutional adoption and evolving crypto narrative
The increasing involvement of Wall Street institutions has sparked debate within the crypto industry, with some critics arguing it undermines the sector’s original decentralization ethos.
Arredondo rejects this view, arguing that institutional adoption reflects the mainstreaming of ideas first developed within crypto rather than their dilution.
She believes the early crypto movement successfully raised important questions about the nature of money and financial systems.
Rather than representing a compromise, she sees the integration of traditional finance as evidence that those ideas are gaining broader acceptance.
In her view, maintaining established financial safeguards alongside innovation is not a contradiction, but a necessary foundation for trust in modern monetary systems.
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