“The benefit of such an approach is allowing access for U.K. customers to established global liquidity in the offshore trading platform, rather than having a ring-fenced U.K. liquidity pool, which should mean better pricing and outcomes for U.K. customers,” Collins said in an emailed comment.
However, Collins warned that the framework currently leaves one critical question unanswered.
The FCA has said overseas branches will only be authorized where their home jurisdiction provides “comparable levels of regulatory protection.” But it has yet to specify which jurisdictions meet that standard.
“That isn’t enough clarity for firms to build a business model,” Collins said, arguing that firms need greater certainty before investing in U.K. operations.
Harries also highlighted DeFi as an unresolved issue, warning that earlier proposals would effectively prevent centralized platforms from offering access to decentralized finance applications.
“The U.K.’s future approach to DeFi will be critical,” she said, arguing such restrictions would leave it out of step with jurisdictions such as the U.S., where policymakers are exploring DeFi as part of broader tokenization strategies.
Regulatory hurdles
Beyond policy questions, firms face a formidable authorization process.
Thomas Cattee, a partner at Gherson Solicitors, warned there is “a very high risk of failure” for firms seeking authorization under the new Financial Services and Markets Act regime.
