The UK has positioned itself as a potential crypto hub, but questions remain over whether its regulatory approach matches its ambitions.

With Europe pushing ahead through MiCA and the US shifting gears with new legislative proposals, the UK’s stablecoin strategy and broader regulatory framework are under close scrutiny.

To unpack how different jurisdictions are approaching digital assets, Invezz spoke with Isadora Arredondo, Director of Global Policy at Hedera.

With experience spanning the UK’s Financial Conduct Authority, advisory work at Global Counsel, and now a leading role at Hedera, Arredondo offers a unique perspective on the evolving policy landscape.

She discusses the UK’s timeline for regulation, US competitiveness, global fragmentation, and the role of DeFi.

Here are the excerpts from the interview:

Invezz: To start, how do you view the UK government’s overall approach to crypto regulation, particularly around stablecoins?

“I think, despite the change in administrations across the past five or so years and kind of leadership in government, there’s been a clear political intention throughout the years to basically drive activity in the market.

And the narrative of establishing a crypto hub in the UK has been maintained throughout.”

She explained that a split remains between regulators and political ambition, particularly on stablecoins.

The Bank of England has expressed concerns over monetary and infrastructure sovereignty, and initially, stablecoins were excluded from the payments regulatory framework.

“That caused concern among the industry because it kind of means that their use case was restricted to a type of investment product, which is obviously not what the primary use case of stablecoins is,” she said.

This also created uncertainty between the Bank of England’s remit and that of the Financial Conduct Authority (FCA).

Invezz: The government has set an end-of-year target for finalising rules. Do you think that timeline is achievable?

“I think we’ve heard about slippages, and also, there is a difference between the regulatory consultation process and actual implementation and licensing. I think the ambition for the latter is 2026, 2027, which some people have expressed concerns about.”

She noted that the UK is actually ahead of the US in some respects.

“The US is having discussions about market structure legislation, where the FCA has consulted on legislation already, and there’s a regulatory process that has been kicked off in the form of discussion papers and consultation processes.

So actually the UK is slightly ahead of the US, although obviously Europe is much farther ahead.”

Invezz: Do you think the US’s recent enthusiasm for crypto has pushed other governments, including the UK, to act more quickly?

“Yeah, 100% both negatively and positively. Positively, in that the administration’s enthusiasm for crypto has fundamentally changed the relationship between the industry and the administration. It’s a stark contrast from the former administration and the SEC’s former approach to crypto.”

She added that competitiveness has become a priority for many jurisdictions.

“With the US’s particular emphasis on bringing activity back to the US by providing more clarity, it has provoked others to move to provide similar incentives.”

But she also highlighted concerns in emerging markets, particularly around USD-backed stablecoins, leading to potential “deposit flights” and currency displacement.

Invezz: Different regions have taken different approaches. Do you see global regulatory fragmentation worsening, or is there scope for harmonisation?

“I think that is reflective of the current geopolitical landscape rather than necessarily crypto.

Though crypto and digital finance and technology policy in general are kind of being the battleground on which this fragmentation of standards and the recession of multilateralism is being seen most starkly.”

She warned that fragmentation could expose consumers to greater harm and regulatory arbitrage, particularly in a cross-border industry like DeFi.

“We really try to focus our engagement both at a regulatory and policy level, focusing on the importance of regulatory cooperation and equivalence regimes… cross-border cooperation is key to being able to stop crime, to monitor fraud.”

She said Hedera engages through consultations, trade associations, and participation in public and private roundtables.

Invezz: This year has seen a surge in hacks and exploits in DeFi. Can regulation catch up and reduce those risks?

“I think we’re seeing positive movement from both industry and regulatory consultations and dialogue that standards are important and necessary.”

But she stressed that frameworks designed for traditional financial intermediation don’t always fit DeFi.

“There might be risks in DeFi, but these are probably more operational resilience risks, KYC and AML risks, cyber risks, rather than necessarily financial misconduct risks.”

Invezz: The crypto industry often complained about regulation by enforcement. Do you think that is changing?

“Massively. I think it’s changed drastically from how it used to be.”

She attributed this to both political will and growing institutional engagement.

“You are seeing the market mature. You are seeing more talent being recruited to the market. You are seeing more compliance-first approaches being taken by different crypto service providers.”

Invezz: How do you see regulation evolving in emerging markets, where adoption has been strong?

“I think it’s very difficult to group different jurisdictions together. Latin America has very different economic, financial, and socioeconomic conditions than APAC.

APAC countries have a much more sophisticated consumer base… whereas in Latin America or Africa, stablecoins are often used to hedge against currency fluctuations or for remittances.”

She noted that some regulators initially took heavy-handed approaches but later recalibrated when consumers accessed risky products without protections anyway.

Invezz: Looking ahead, what developments do you expect in the UK and the broader crypto world over the next couple of years?

“I think we’re going to see a bit more progress on central banking upgrades of settlement systems and payment systems. I think we’re going to see an uptake by central banks of more wholesale CBDCs and instruments to help protect their remit and their role in this space.”

She also expects greater institutional adoption and a blurring of lines between traditional finance, centralised finance, and DeFi.

“Over time, we’re going to see the likes of Revlon acting as much as Coinbase does. I think we’re going to see a blending of these different fintech into an amalgamation of services and products that consumers cannot really distinguish, whether they’re crypto products or e-money.”

On the regulatory side, she hopes for greater cooperation.

“Our hope is that there’s going to be more cross-border cooperation and supervisory dialogue and standard setting at a multilateral level. I think that’s crucial not just for scalable liquidity, but also for consumer protection and financial stability concerns.”

The post Interview: Hedera's Isadora Arredondo on stablecoins, DeFi, and the global future of crypto regulations appeared first on Invezz

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