Aave Labs submitted our response to the UK Financial Conduct Authority's Cryptoasset Perimeter Guidance. We greatly appreciate the FCA's hard work and the opportunity to submit our public comment.

Onchain financial systems are being built right now — in the US, EU, Asia, and the Middle East. The UK has a choice: build a regulatory framework that lets it participate in and shape that global ecosystem, or build a walled garden in isolation cut off from the future of global finance.

Our response makes three core arguments.

DeFi protocols are public infrastructure

Open (permissionless) and rule-based, they execute identically for all users. They do not act as intermediaries. Treating developers as financial intermediaries is a fundamental misunderstanding of what they are — software engineers.

The "added value" concept for the definition of “arranging” has no basis in statute

The FCA introduced in this consultation the concept of "added value" as part of what's considered as "arranging" and applying it broadly with no clear boundaries. However, this "added value" concept has no basis in the statute. The legislation called Regulated Activities Order (RAO) simply provides that enabling parties to communicate is not "arranging", and the "added value" qualification is not found anywhere in the legislation.

We can fix this with straightforward legislative amendments

The proposed amendments would preserve the full intermediary perimeter for genuine intermediaries while keeping public infrastructure outside it — consistent with the RAO legislation, the Money Laundering Regulations (MLR), and HM Treasury's intent.

The UK has an opportunity to be a home for the next generation of onchain financial systems. We hope this response helps the FCA get the framework right.