Regulatory Roundup #2

Weekly Summary

Washington lobbed a 168-page “turbo-charge the blockchain” plan at the SEC and CFTC, and they instantly began assembling a flat-pack rulebook - a few spot-trading screws here, custody dowels there, tighten with a no-action Allen key. Brussels, keen to ensure it maintains an adequate level of bureaucracy, followed with a portion control memo for crypto in banking capital: modest for tokenised treasuries, hefty surcharges for the sugary stuff. London rolled up the shutters on its crypto-ETN kiosk with effect 8 October, while Manila quietly pressed the big red block-domain button, warning four offshore heavyweights to register or disappear.

🔦 Spotlight

White House blueprint: the US wants crypto trading rails as slick as its stock exchanges

The 168‑page Strengthening American Leadership in Digital Financial Technology report, dropped just before Congress headed for recess, set out a sweeping plan to bolt Wall Street‑grade infrastructure onto the token economy and to keep the dollar firmly at the centre of it. Chapters III through VI read like a to‑do list for regulators and engineers alike: overhaul market structure, bring banks onto public chains, and give stablecoins the polish they need to plug straight into payment systems. The report even prods agencies to dust off sandbox powers so novel models can launch without a marathon of no‑action letters.

First up, trading venues. Chapter III instructs the SEC and CFTC to “immediately enable” federally regulated spot trading of digital assets and to let a single licence cover multiple business lines. If Congress ultimately hands the CFTC the keys to spot‑crypto trading, the agency will still need to craft its own micro‑rulebook. The Working Group argues that the playbook should import familiar exchange standards (fair access and robust market‑data disclosure) while recognising that crypto already trades 24/7 - so reporting and surveillance have to keep pace. Any nip‑and‑tuck work on Regulation NMS for tokenised NMS securities, however, is left firmly on the SEC’s operating table.

Bank rails get a makeover in Chapter IV. Federal regulators are told to write technology‑neutral guidance that lets regulated lenders hold tokenised deposits, run on‑chain repo desks and offer dollar settlement accounts to crypto venues - provided they nail key‑management hygiene and real‑time surveillance. Clearer capital treatment is promised in return, signalling that USD‑backed liquidity could soon sit natively on public blockchains rather than limp through correspondent networks.

Stablecoins are cast as the Fedwire of Web3 in Chapter V. Issuers would need bankruptcy‑remote reserves, continuous attestations and a ban on re-hypothecation - but, in exchange, would gain an explicit federal blessing. Notably, the report rules out a retail CBDC as “a privacy nightmare”, preferring a regulated private‑sector dollar that can settle in seconds.

Finally, the Working Group’s wish‑list for Congress includes a statutory right to self‑custody, a fast‑track for portfolio‑margining rules and, in a nod to libertarians, an outright ban on any future U.S. CBDC. Commentators argue that a coherent federal rulebook could cement U.S. trading venues as the primary pools of global crypto liquidity. Put simply: the groundwork is being laid for trades that settle before your coffee gets cold and order books that never sleep.

For incumbent banks and brokers the takeaway is simple: get with the programme or concede the field. Chapter IV urges supervisors to embrace “technology‑neutral” oversight, bin blanket de‑risking, and let lenders book tokenised deposits, run on‑chain repo and extend dollar credit to crypto venues. It also nudges the Fed, FDIC and OCC to lobby Basel so crypto assets don’t languish under that eye‑watering 1,250 % risk weight (try incorporating that into your VaR model and watch cell C63 politely fill itself with “😂😂😂”). If these reforms land, capital charges shrink, freeing banks to launch crypto custody, settlement and collateral services without nuking their CET1. (whitehouse.gov)

🌎 Global Developments

🇺🇸 United States

SEC fires the starting gun on “Project Crypto”

In a speech titled American Leadership in the Digital Finance Revolution, Chair Paul Atkins told the America First Policy Institute that every SEC division now has six months to table draft rules for token launches, custody and trading. The brief: give issuers bright-line guidance on when a token is, or is not, an investment contract, create purpose-built disclosures and safe harbours for airdrops and network rewards, and build a single “super-app” license so broker-dealers can trade securities, non-securities and staking products under one roof. Atkins also directed staff to modernise the custody rule, scrub the remnants of SAB 121 and ensure investors can choose between bank, broker or self-custody wallets.

CFTC fires up listed‑spot trading pilot.

Acting Chair Caroline Pham has launched a “Listed Spot Crypto Trading Initiative” that would let designated contract markets list physically‑settled spot crypto contracts under existing Commodity Exchange Act powers. The agency opened a two‑week comment window (closes 18 August) seeking feedback on how to adapt Part 40 self‑certification and leverage rules so retail trades with margin clear on‑exchange. Pham calls it the first leg of the CFTC’s “crypto sprint” to implement the White House blueprint and vows tight coordination with the SEC’s Project Crypto. (CFTC)

Why it matters

If the timetable holds, U.S. venues could list tokenised equities, spot crypto and on-chain repo side-by-side inside a registered ATS by early 2026, while banks gain the legal footing to hold crypto for clients. For trading firms, that opens up the possibility of a market where the same low-latency pipes that reach NYSE and Nasdaq can route orders to smart-contract order books that clear in seconds.

SEC clarifies when liquid staking is not a security

The CorpFin statement says that simply locking your own ETH into a protocol validator and receiving a liquid‑staking receipt token in return "generally does not constitute an offer or sale of a security". Where the token merely evidences an individual’s staked position, with no pooling, profit‑sharing or managerial promises, it is unlikely to be a note or an investment contract. In other words, vanilla protocol staking and its one‑to‑one wrapper tokens fall outside the Securities Act. (SEC)

Trouble starts when a promoter aggregates customer assets, re‑stakes them, sets the yield policy and markets the token as an income product. Those flavours of liquid staking may trigger Securities Act and Investment Company Act registration, the staff warn, especially if investors rely on the promoter’s efforts to earn variable returns. CorpFin invites dialogue and even no‑action relief for compliant structures but gives existing schemes 90 days to open talks or face enforcement – a softer, but still pointed, follow‑up to Chair Atkins’ wider Project Crypto agenda. (The Block)

🇪🇺 European Union

MiCA CASP Authorisations Update (per ESMA)

• 🇪🇸 CECABANK S.A. - 24/07/2025
• 🇪🇸 OPEN BANK S.A. - 24/07/2025

Capital: US opens the buffet; EBA breaks out the scales

Hot on the heels of Washington’s push to soften the 1 250 % charge, the European Banking Authority has published draft technical standards on how banks should risk‑weight crypto exposures under the Capital Requirements Regulation (CRR). The proposal mirrors Basel’s bucket system: tokenised real‑world assets that meet strict hedging and redemption tests keep their usual capital treatment, while crypto assets remain locked in the 1 250 % sin‑bin. Consultation runs until 22 October 2025.

The draft also limits Group 2 exposure to 2 % of Tier 1 capital and requires daily check‑ins—think of it as a speed‑limiter on European balance sheets. Even if Washington lifts the speed limit, desks running trans‑Atlantic routes will still need to downshift for the Brussels stretch.

🇬🇧 United Kingdom

FCA unlocks the ETN toy box, warns ‘small parts, choking hazard’

From 8 October retail investors will finally be able to buy crypto exchange‑traded notes (ETNs), provided that the paper is listed on a UK‑recognised investment exchange and firms comply with requirements such as the Consumer Duty, risk warnings plus standard financial‑promotion rules (good luck, Compliance teams). The watchdog says the market has “evolved” and that traders now have enough information to decide whether losing all their money is a risk worth taking. There is still no FSCS safety‑net and the 2021 ban on crypto derivatives stays welded in place. Note that the FCA is categorising these ETNs as Restricted Mass Market Investments (RMMIs), so you may need to take an appropriateness test prior to getting stuck in. (FCA)

London’s first BTC and ETH notes from 21Shares, WisdomTree and Invesco have been languishing on the shelf since May 2024, accessible only to the pros and clocking volumes that barely cover the exchange’s coffee bill. Opening the door to retail is being hailed as a liquidity lifeline. 21Shares calls it a “game‑changer” and another sign that the UK is edging closer to true digital‑asset parity with the likes of the EU and US. (The Block)

🇵🇭 Philippines

Philippines SEC threatens heavy sanctions for unregistered exchanges

Manila’s Securities and Exchange Commission has issued a public advisory naming OKX, Bybit, KuCoin and Kraken as unlicensed “online investment platforms” targeting Filipinos. The agency says it will ask the National Telecommunications Commission to block offending domains, direct banks and e-money issuers to shut peso on-ramps, and seek asset freezes where possible. Repeat operators (and their local agents) face fines of up to ₱5 million and prison terms of up to 21 years for violating the Securities Regulation Code. (SEC Philippines)

Why it matters. The crackdown tightens an already narrow compliance path for foreign exchanges eyeing Southeast Asia’s second-largest remittance market. Trading desks routing liquidity into APAC will need to geo-fence Philippine users or risk mid-route black-holing of customer funds and sudden latency spikes as ISPs pull the plug. (Cointelegraph)

🔎 Things to Watch

Coming into view:

• 🏛️ Post-recess progress on the CLARITY Act.
• 🌐 OECD Crypto-Asset Reporting Framework (CARF) implementation timeline across EU and G20 nations ahead of 2026 start
• 🇬🇧 Further FCA consultations on the UK crypto regime
  

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