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.
