DEX in the City: Why the Supreme Court's FTC Ruling Could Rewire Crypto Regulation

**Katherine Kirkpatrick Bos** (0:00)
Why do you think the bill is named Clarity? The opposite effect is going to happen here, where it's never certain, and things are going to change at a whim, depending on how the president is feeling about it.

**Laura Shin** (0:13)
Hi all, and welcome to Decks in the City, where the wallets are cold and the takes are hot. Before we get going, remember, as always, we're lawyers, but we're not your lawyers. Nothing you hear on Decks in the City is legal or financial advice, and it doesn't create an attorney-client relationship. For the fine print, check unchainedcrypto.com.
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**Laura Shin** (0:59)
And we're back. First, we have Jessi, Web3 prosecutor turned Web3 protector at Ribbit Capital, and Vy from the SEC to Web3. And I'm your host, KK, Katherine, fluent in TradPy and conversant in deep tech.
So I have to say, I'm just going to start us off guys by jumping right in and being like, what's going on in Europe?

**Vy Le** (1:22)
Okay.

**Laura Shin** (1:24)
All of a sudden, Europe has woken up. And we're going to talk about MiCA in a minute, the markets in crypto asset, comprehensive market structure bill for Europe and the changes to come with MiCA. But before that, I often, I'm using Europe as a term, but for a minute, I'm going to talk about the United Kingdom, which has had kind of a confusing relationship with crypto over the years. I can't decide if the UK hates crypto or loves crypto. I mean, obviously there's partisan components to this, but they've done a lot of kind of confusing things where one minute it seems like they're very pro crypto and another minute, for example, there was some disturbing action around stable coins that seems like it's a terrible jurisdiction. But the latest development is actually a pretty big deal.
As always, I really didn't see that much chatter about it, which was surprising.

**Katherine Kirkpatrick Bos** (2:20)
I agree. Sorry to interrupt. I agree. I have been shocked how little interaction there has been with these FCA rules. They are significant. They're positive in a lot of ways. They show where industry was able to be successful in pushing things the right way.
There's also some really interesting flags in it that are slightly concerning that I'm sure you're going to talk about.
I am really shocked and I'm thrilled that we're touching on these topics. We have not talked a lot about outside the US regulations. Hopefully, we can begin to incorporate that because you're right. We could do multiple episodes on this.

**Laura Shin** (3:00)
A thousand percent. My only thought is that these rules were released on June 30th. They got a little drowned out by the July 4th holiday and the state of clarity in the United States. But anyway, OK, we should tell our listeners, viewers what's going on. So on June 30th, the UK's Financial Conduct Authority, the FCA, their primary financial regulator, published a pretty massive package of final policy statements and guidance for crypto in the UK. So this is considered the final piece of the UK's crypto roadmap. And I'm summarizing here was actually four final policy statements plus guidance, like effectively a comprehensive rule book. And in this, they covered a ton of stuff. I mean, they covered everything from stable coin issuance to market abuse, credential capital requirements, disclosures, DeFi, we'll get to that in a second. It is a lot. And this now encompasses all kinds of crypto companies, including obvious suspects like custodians and stable coin issuers and crypto finance platforms, but also arguably in the future certain DeFi protocols.
I want to hear from Vy and Jessi on their thoughts, but my thoughts, okay, there's good and bad in this. On a high level, the framework treats crypto like TradFi.
Okay. But the good news is that the FCA, as Jessi referenced, cut capital requirements for stable coins in response to industry feedback. The regime also doesn't take effect till the fall of 2027 Everyone really has some time to consider this, percolate on it, get in line, get ready. Then there are also two consultation papers covering FCA handbook aspects that aren't finalized yet. Those two cover market making and DeFi. We have to stay tuned here.
They have promised to listen to a lot of industry feedback specific to regulating DeFi. Obviously, this is a real hot button issue with clarity in the United States, but the FCA said, read DeFi, it will consult further on things like objective indicators of decentralization, whatever that means.