Regulatory Roundup #20

Summary

The most consequential UK crypto rule of the year so far was a retreat, and a sensible one. On 22 June the Bank of England dropped the £20,000 holding cap at the center of its systemic stablecoin regime, swapping per-wallet limits it could never enforce for a £40 billion ceiling on each coin’s total issuance. MiCA’s transitional period expired on 1 July with no extension, leaving Poland the only member state without implementing law after a third presidential veto, and California’s DFAL licensing deadline fell on the same day. Meanwhile the Japanese lower house voted to move crypto into its securities law, and the CFTC’s new perpetuals market is already in court.

🔦 Spotlight

🏛️ The Bank of England blinks on holding limits

For most of the last two years, the central objection to the Bank of England’s systemic stablecoin proposals was operational rather than philosophical. The November 2025 consultation proposed to cap individual holdings of any systemic sterling stablecoin at £20,000, and business holdings at £10 million. Industry pointed out, repeatedly, that a holding limit assumes that visibility of an individual’s total holdings is possible. Given the reality that coins move between wallets, custodians and venues that no single issuer controls, enforcing a per-person ceiling across that fragmentation becomes near impossible.

On 22 June, the Bank conceded the point. Its policy statement and draft Code of Practice for systemic stablecoin issuers drop the holding limits entirely. In their place sits a single temporary issuance guardrail: £40 billion per systemic stablecoin product, with no restriction on how much any household or business can hold, and no limit on the size, frequency or type of transaction. The Bank’s own framing is that this “delivers the same policy outcome, while being cheaper and easier to implement”. Translated - the concern, it turns out, was never that any one person held too much. It was that a systemic coin could grow large enough, fast enough, to pull deposits out of the banking system and squeeze the supply of credit. A cap on aggregate issuance addresses that directly. A cap on individual wallets only ever addressed it by proxy, and a barely enforceable proxy at that.

Backing-asset rules moved in the same accommodating direction. The Bank raised the maximum share issuers may hold in interest-bearing assets, short-dated UK government debt, from 60% to 70%, with the remainder in unremunerated deposits at the Bank. Those deposits exist to fund prompt redemptions when coins flow out, and they earn nothing, which is the cost of the license. Issuers take the yield on the gilt portion. Interest or income linked to holding or retaining a coin stays prohibited, though the Bank left room for payment-linked rewards or loyalty schemes in some circumstances, so the product remains a payment instrument rather than a deposit substitute wearing a different hat.

It is worth being precise about what the regime actually covers, because it is narrower than the coverage suggests. A stablecoin only becomes subject to the Bank’s regime only once HM Treasury recognizes the relevant payment system or service provider as systemic. Everything else, which today means essentially all sterling stablecoin activity, including the buying and selling of crypto assets, stays with the FCA. The £40 billion figure is, in that context, an initial temporary issuance guardrail, not the test for systemic designation. The Bank and FCA have committed to a managed transition as issuers grow from non-systemic to systemic. 

The Bank’s change of heart has not come out of the blue. A cross-party House of Lords Financial Services Regulation Committee report on 3 June urged the Bank to reconsider the holding limits, and industry submissions had said the same for the better part of a year. Deputy Governor Sarah Breeden called the result “a world leading regime”, which is the sort of thing deputy governors say. The more accurate description is that the Bank held its ground on the policy objective, protecting bank credit provision, and gave up on a mechanism that they were repeatedly told was never going to work.

Consultation on the draft Code closes 22 September, final rules are due by the end of the year, and the regime goes live in 2027. The window for anyone so inclined to argue that £40 billion is the wrong number, in either direction, is open now.

🌎 Global Developments

🇺🇸 United States

💼 CME sues the CFTC over the Kalshi perps approval

CME Group filed a suit against the CFTC on 18 June, asking a federal court to vacate the Commission’s approval of KalshiEX’s bitcoin perpetual contract, along with the accompanying policy statement that lets any futures exchange self-certify similar contracts. The argument turns on one word. CME says a perp, where counterparties periodically exchange a funding-rate payment and no one takes delivery, is a swap under the Dodd-Frank Act, not a listed future. If a court agrees, the effects reach the market’s structure: the onshore perpetuals route would move into the swaps framework rather than the listed-futures framework, with consequences for venue registration, eligible participants, capital, margin and dealer analysis.

The timing of the original approval is part of CME’s complaint. CME alleges the CFTC cleared the Kalshi contract on 29 May in a single day, without notice and comment, and without using the word “swap” once, despite more than 150 comment letters on file. A CFTC spokesperson described the suit as “lawfare” against the administration’s pro-innovation agenda and said the Commission looked forward to dismissing a “frivolous” claim.

For anyone building or trading on the onshore perps route that opened in May, this is the litigation that decides whether the route stays open on its current terms. The classification question CME has raised was always latent in the Commission’s approach; it is now in front of a judge. 

🇬🇧 United Kingdom

🧳 No issuer, exchange holds the regulatory bag?

The hardest question in crypto disclosure is who answers for a token that has no issuer. The FCA’s final rulebook, published on 30 June across five policy statements (PS26/9 to PS26/13) under the Cryptoassets Regulations 2026, gives an answer that often lands on the trading platform. Before a qualifying cryptoasset can be admitted for retail trading, a UK platform must run due diligence and publish a qualifying cryptoasset disclosure document into an FCA-owned central repository. Where there is no identifiable issuer, responsibility for that document can fall on the person requesting admission, or on the platform if it admits the asset on its own motion or accepts responsibility, and in those cases the platform can become the person investors sue if the disclosure is defective. The venue inherits a role securities law normally hands to the issuer.

Market abuse is the other half of the design, and here the FCA deliberately declined to copy across UK MAR. Instead it built a civil, industry-led regime where platforms and intermediaries do the front-line detection, with reach over abusive behavior wherever it occurs, and on-chain monitoring and cross-platform information sharing required of larger platforms (average revenue of at least £10 million a year, measured at 12-month intervals over the previous three years). Two touches show the FCA adapting familiar concepts to how crypto works: it allowed delayed disclosure of inside information where immediate release would expose an unpatched code vulnerability, and it acknowledged that open-source collaborative development raises different issues from traditional issuer disclosure. Whether sharing information through open development is unlawful disclosure stays fact-specific, not a blanket safe harbour. Anyone who has tried to map insider-dealing rules onto a public code repository will recognize the problem being solved.

Elsewhere in the package, two other consultation changes matter. The FCA dropped its insistence on a UK legal entity for dual-regulated banks: a PRA and FCA regulated bank may now run cryptoasset activities through a UK branch, a concession won by large institutions that already book UK business that way (FG26/7). And the prudential regime (PS26/12) halved the operational-risk capital charge on stablecoin issuance, from 2% to 1%, while confirming deductions from own funds for qualifying cryptoassets not traded on a UK platform and for trading-book positions that cannot be prudently valued, a heavy disincentive to holding tokens outside the admitted set.

The authorization gateway opens on 30 September, so the made rules now replace proposals for planning purposes. For platforms, the gatekeeper and disclosure-responsibility design is the part to internalise first, because admitting a token is no longer just a listing decision, it involves an assumption of liability. The one genuinely open question is DeFi, where the rules bite only if there is an identifiable controlling person, and the FCA has pushed the indicators of decentralization to separate guidance later in the year.

🇪🇺 European Union

🇵🇱 President Nawrocki says “nie” to MiCA bill yet again

President Karol Nawrocki vetoed Poland’s MiCA implementing bill for the third time on 11 June. Poland is now the only member state still without national implementing legislation with the transitional period expired. The latest bill differed from its predecessors in one respect, an amendment from the President’s own Chancellery requiring the KNF to publish annual reports on the crypto-asset market. His objections were otherwise unchanged: that the statute is overregulation, that its near-hundred pages compare unfavorably with the slimmer enactments of the Czech Republic, Slovakia and Hungary, and that its enforcement powers, including account blocking and website takedowns, go too far.

The veto came shortly before the expiry of the final MiCA transitional periods. The final set expired on 1 July. From that date, any CASP operating without a MiCA license is in breach of EU law and expected to wind down in an orderly way. ESMA and national authorities, the AMF prominent among them, have published exit expectations for unauthorized firms.

The Polish gap has passporting impacts as well as locking up the gates on local firms. Poland is not a large CASP hub, but a member state without a functioning national framework complicates cross-border service into Polish customers and leaves authorized firms guessing about supervision at the Polish end. 

🌏 Asia-Pacific

🇯🇵 Japan makes progress

Japan’s House of Representatives passed the FIEA amendment bill on 11 June, sending to the Upper House a measure that relocates crypto-asset regulation from the Payment Services Act into the Financial Instruments and Exchange Act, the statute that governs equities and bonds. The reclassification is the substantive change. Crypto would be positioned as a financial product distinct from securities, sitting under securities-style market-conduct rules, including disclosure obligations, unregistered-operator controls and unfair-trading enforcement, and the maximum penalty for operating an unlicensed exchange would rise from three years to ten.

Separately, Japan’s tax reform process and market commentary point toward a flat-rate treatment for major crypto assets, in place of the current miscellaneous-income treatment that can reach 55%, and a possible pathway to spot crypto ETFs, but those outcomes depend on enactment and follow-on tax and FSA rules.

This is not yet a done deal. One chamber has voted, but the Upper House has not scheduled its vote, and the FSA’s own Diet page still lists the measure as submitted rather than enacted. Passage is widely expected given the ruling coalition’s majority, but expected and done are different words, and the precise scope of the FIEA obligations will be set by subordinate FSA rules that do not yet exist. 

🇹🇼 Taiwan passes its Virtual Asset Service Act

Taiwan’s Legislative Yuan passed the Virtual Asset Service Act at third reading on 30 June, giving the island its first dedicated statute for digital assets. The FSC, which will supervise the regime, framed the change as moving VASP oversight from an anti-money-laundering registration exercise to full supervision of operations and market conduct.

The Act defines seven categories of virtual asset service provider, covering exchange, trading-platform, transfer, custody, underwriting and lending businesses. Each faces requirements on fit-and-proper standards, internal controls, information security, listing and delisting review, client-asset segregation and civil liability to customers. Stablecoins get a stricter gate: issuing one in Taiwan will require both central bank consent and FSC permission, full reserve backing and a statutory trust over the reserves, with periodic audits and disclosure. Fraud and price manipulation carry three to ten years’ imprisonment and fines up to NT$200 million.

The timing is not settled. The bill goes to President Lai Ching-te for promulgation, and the Executive Yuan sets the commencement date. Once it takes effect, VASPs already registered for AML purposes get 12 months to apply for a license and 21 months to secure one, extendable once by three months. Regulatory guidance is to follow.

🇦🇺 ASIC pushes the AFSL cliff to September and finalises crypto relief

ASIC has extended its INFO 225 no-action position for digital-asset businesses to 30 September 2026, easing a deadline that Issue 19 flagged as imminent. To rely on the position a business must have first provided the relevant service in Australia on or before 31 December 2025, and must, by the new date, either lodge an AFSL application or variation, or put in place an authorized representative or intermediary authorization arrangement with an AFS licensee, a route ASIC added with this extension. Miss it, and from the following day the firm risks operating in breach of the Corporations Act.

Separately, ASIC had already finalised class relief in December 2025 for certain stablecoins, wrapped tokens and omnibus custody accounts. The final relief expanded eligibility to include issuers that had applied for a license, not only those already licensed, which removed a chicken-and-egg problem for products waiting in the queue. The relief does not reach crypto lending and earn products, most derivatives, or non-cash payment facilities other than stablecoins.

👀 Things to Watch

• 🇺🇸 CLARITY Act: press reports say closed-door negotiations broke down on 9 June after changes to a state-attorneys-general enforcement provision, while Section 604 objections from law-enforcement groups remain live. The bill has advanced out of Senate Banking and sits on the Senate track, with no floor vote scheduled and roughly five weeks to the August recess.
• 🇺🇸 GENIUS Act rulemaking: the FinCEN/OFAC AML and sanctions NPRM comment window closed 9 June; the joint customer-identification NPRM is open for comment until 21 August. Supervisory final rules are due by 18 July 2026.
• 🇺🇸 California DFAL: the license application deadline fell on 1 July 2026. Digital-asset business activity with a California resident now requires a DFPI license, an application submitted by the deadline and awaiting approval or denial, or an exemption.
• 🇺🇸 CFTC energy perpetuals: the Commission issued a request for comment on 22 June on listing perpetual contracts and 24/7 trading for physically delivered energy commodities such as crude oil, extending the perpetuals question well beyond crypto; comments are due 27 July.
• 🇺🇸 SEC innovation exemption for tokenized securities: reportedly delayed after exchange and market-structure pushback; no SEC-published revised timeline identified. The synthetic/custodial ownership line remains the issue to watch.
• 🇺🇸 SEC Reg Crypto: OIRA review continuing; publication awaited.
• 🇪🇺 MiCA: transitional periods expired 1 July 2026 EU-wide, no extension. Poland remains the only member state still without national implementing law after the 11 June veto.
• 🇪🇺 EU Commission MiCA review: targeted consultation deadline extended to 30 September 2026.
• 🇬🇧 FCA: near-final crypto rulebook published June 2026 (PS26/9–PS26/13, plus FG26/7), with the authorization gateway opening 30 September. A September consultation will propose a six-month deferral of the admissions rules for tokens already in circulation, and guidance on how DeFi decentralization is assessed is still to come.
• 🇬🇧 Bank of England systemic stablecoin Code: consultation on the draft Code closes 22 September; final Code by end-2026; regime live in 2027.
• 🇦🇺 ASIC: AFSL lodgement deadline now 30 September 2026 following the no-action extension.
• 🇯🇵 Japan FIEA bill: Upper House vote not yet scheduled; FSA Diet page still lists the measure as submitted. Subordinate FSA rules will set the operative detail.
• 🇹🇼 Taiwan: Virtual Asset Service Act passed at third reading on 30 June, awaiting presidential promulgation and an Executive Yuan commencement date. Once in force, AML-registered VASPs get 12 months to apply for a license and 21 months to obtain one; authorising sub-laws still to be drafted.
• 🇰🇷 South Korea: reporting continues to point to unresolved disagreement between the FSC and Bank of Korea over bank control of won-stablecoin issuers, including the proposed 51% bank-ownership rule, with President Lee having named a won stablecoin a national priority.

Coming into view:

• 🇺🇸 CME v CFTC: the outcome decides whether onshore perpetuals are regulated as futures or swaps, and therefore whether the May framework survives in its current form.
• 🇺🇸 DTCC tokenization service: limited production trades July 2026, full launch October 2026.
• 🇬🇧 FCA/Bank of England end-to-end stablecoin regime: managed transition from non-systemic to systemic supervision, with the FCA’s final rules for stablecoin issuance now published (PS26/10, 30 June) alongside a joint FCA/Bank statement on supervising systemic issuers. Still to come: a consultation later this year on how FCA rules will apply once an issuer is recognized as systemic.
• 🇪🇺 EU MiCA review report: if the review recommends amendment, a legislative proposal could follow in 2027.
• 🇪🇺 EU Market Integration and Supervision package: multi-month legislative negotiations continuing.
• 🇯🇵 Japan spot crypto ETFs: a legal pathway opens if the FIEA bill is enacted, with Tokyo exchange operators pointing to 2027.

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