Jun 24, 2026, 3:23 p.m.
4 min read
Summary
- Isadora Arredondo, a former U.K. Financial Conduct Authority official now at Hedera, says Britain’s crypto hub ambitions have been slowed less by hostility to the sector than by competing regulatory priorities and a gap between policy design and execution.
- She argues the U.K. has taken a split approach, moving quickly and proactively on institutional and wholesale crypto while subjecting startups and retail-focused firms to lengthy, complex authorization under legacy rules rather than a dedicated framework like the EU’s MiCA.
- Arredondo believes the next phase of digital money will hinge on interoperability and common standards across blockchains, stablecoins and CBDCs, and she sees the growing role of major financial institutions in crypto as proof that core crypto ideas are being absorbed into mainstream finance rather than abandoned.
Isadora Arredondo has a unique outlook on crypto regulation in the United Kingdom. Before joining Hedera as vice president of global policy, she worked at the U.K.’s Financial Conduct Authority (FCA), where she was involved in policy work during Brexit and,later, in crypto regulation.
Arredondo believes one of the main reasons Britain's ambitions to become a crypto hub have struggled to gain momentum is a gap between policymaking and implementation.
"I had never encountered first-hand the world that separates policy ambition from policy execution," Arredondo told CoinDesk in an interview in London. "There is a great divide between the ambition to drive policy and how it is actually implemented."
CoinDesk’s interview with Arredondo took place before the Bank of England announcement of new rules for stablecoins, in which the U.K.’s central bank essentially rolled back a previous proposal to cap limits on fiat-pegged stablecoins held by individuals and businesses. Instead, the BOE pivoted to a macro-level "temporary issuance guardrail," capping the total circulation of any single systemic stablecoin at 40 billion pounds ($50.6 billion).
Crypto hub ambitions
To understand why the U.K.’s ambition to become a global crypto hub has moved slowly, Arredondo points to events that shaped the FCA during her time there between 2018 and 2021.
Her view differs from that of many crypto firms, which have argued that slow approvals and regulatory hurdles reflect hostility toward the sector. Arredondo says much of the delay came from competing priorities inside the regulator.
First came Brexit, which required the FCA to rewrite large parts of its rulebook for life outside the European Union. Then came the economic shock of COVID-19.
"The COVID crisis hits, and crypto goes from a perimeter issue to a back-door issue," Arredondo said. "The entire organization's focus shifts to crisis mode, dealing with COVID loans, banking responses, and forbearance measures."
When the crisis eased, the regulator was dealing with the fallout from high-profile investment failures, including the collapse of London Capital & Finance and the Woodford Fund.
Arredondo said those events pushed the FCA toward a stronger focus on consumer protection. Crypto was increasingly viewed through that lens, particularly under CEO Nikhil Rathi.
A split approach
Arredondo argues that the FCA's approach to crypto has developed along two tracks: one for large institutions and another for startups and retail-focused firms.
On the wholesale side, the FCA launched projects such as the Digital Securities Sandbox and worked with financial institutions exploring tokenization and digital assets.
"When it comes to institutional engagement with crypto, they are quite forward-looking, proactive, and hands-on," Arredondo said.
The picture looks different for smaller crypto firms.
Unlike the European Union's Markets in Crypto Assets (MiCA) framework, which created crypto-specific rules, the U.K. has largely tried to fit crypto activities into existing regulatory structures. For startups, Arredondo said that can mean long authorization processes and repeated reviews from different teams.
Crypto firms have frequently criticized those delays, arguing they make it harder to build businesses in the U.K. The Bank of England’s cautious, slow approach to crypto has frustrated the private sector, according to a recent Financial Times article. It noted that while businesses are pushing for fast integration, the central bank’s tight restrictions on stablecoins have created a massive regulatory bottleneck.
Yet Arredondo also defended the country's standards. "While playing by the U.K.'s rules is incredibly difficult, it pays off," she said. "Well-regulated businesses thrive, bringing a baseline of institutional credibility."
U.K. regulations are set to come into effect in October 2027.
Looking beyond regulation
Now at Hedera, Arredondo spends much of her time looking at how governments and central banks are approaching digital money.
Her concern is not necessarily the technology itself. "We have sophisticated solutions to many problems, but we don't yet have a coordinated effort on interoperability," she said.
Arredondo argues that the industry has spent years building separate blockchain networks, stablecoins and digital money projects, but has spent less time ensuring those systems can work together.
"We need to move the market from everyone doing their own very cool things to actually thinking about standard-setting across the piece."
The issue has become more important as governments, banks and private companies increasingly experiment with tokenized deposits, stablecoins and central bank digital currencies (CBDCs).
Arredondo pointed to the European Union (EU) as an example of a jurisdiction seeking to accommodate multiple forms of digital money simultaneously.
The EU's approach allows stablecoins, tokenized bank deposits and central bank money to coexist under the same broad framework, she said.
Wall Street's crypto role
The growing role of banks, asset managers and large financial institutions in crypto has divided the industry. Some early crypto supporters argue the sector is moving away from its original goals of decentralization and disintermediation.
Arredondo sees it differently. "The early crypto vision raised fundamental economic questions and brought them to the mainstream," she said.
For Arredondo, the rise of institutional crypto does not mean the industry's early ideas failed.
Instead, she sees it as evidence that ideas first developed inside the crypto sphere are increasingly being adopted by mainstream finance. "It shouldn't be disappointing that we are maintaining the pillars that have long anchored trust in money."
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