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.