UK’s FCA says crypto apps may need licenses when algorithms choose trade routes

Britain's financial watchdog warned that crypto trading apps could need regulatory approval if their software decides customer transactions.In draft guidance published Oct. 21, the Financial Conduct Authority (FCA) said applications that select trading venues or transaction routes based on assessments of price, liquidity, costs or execution speed may be arranging crypto deals, an activity requiring authorization under rules taking effect in October 2027.The interpretation could bring decentralized finance (DeFi) aggregators and automated trading interfaces within the UK's licensing regime, potentially forcing operators to obtain regulatory permission or change how their software handles customer trades.The proposal forms part of the FCA's efforts to define which crypto businesses qualify for exemptions from the new framework, scheduled to take effect on Oct. 25, 2027.DeFi trading algorithms face licensing scrutinyThe FCA's consultation focuses on a technical-services exemption intended to protect software providers whose applications simply connect customers to third-party trading platforms or decentralized protocols.Under the proposed interpretation, an interface that transmits cu...