Regulatory Roundup #5

Weekly Summary

Three European regulators kicked off the fight for the future of MiCA. Paris, Rome and Vienna want MiCA tightened and the biggest CASPs parked with ESMA; France even aired the “atomic weapon” of challenging passports if standards diverge. 

In the UK, Threadneedle Street floated holding caps for systemic sterling stablecoins in the name of stability, which industry hears as anti-innovation and capital controls. Stateside, Paul Atkins signalled fewer ambushes and more guidance, Gemini Earn edged toward settlement, and the SEC and CFTC mapped a path for spot products on registered venues. 

🔦 Spotlight

France, Italy and Austria push to tighten MiCA. France floats the nuclear option on passporting 

Three national regulators, France’s AMF, Italy’s Consob and Austria’s FMA, have lit a fire under the current MiCA status quo. In a joint document they argue that the first months of application have exposed uneven supervision and regulatory arbitrage across the bloc. Their headline fixes: give ESMA direct supervision of the biggest crypto‑asset service providers, harden the rules for EU intermediaries that access third country platforms, mandate independent cyber audits before authorization, and centralize white paper filings. The European summer holidays are well and truly over.

The flashpoint is passporting. MiCA grants an EU wide passport once a CASP is authorized by its home supervisor, so authorize in one, operate in all. The AMF says the single market only works if everyone plays to the same standard. AMF chair Marie Anne Barbat Layani even aired the deterrent: “We do not exclude the possibility of refusing the EU passport,” she said. “It’s very complex legally and not a very good signal for the single market, it’s a bit like the ‘atomic weapon’ … but it’s still a possibility we hold in reserve.” (Reuters)

Would a host regulator block a MiCA passport? It’s not an action to be taken lightly. Passporting is a key plank of the EU’s single market for financial services and an important symbol of EU regulatory harmonization. The realistic lever for any action in this case is MiCA’s intervention toolkit, where a national authority can temporarily restrict the marketing, distribution or sale of certain crypto assets or practices in its territory if there are significant investor protection, market integrity or financial stability concerns, with strict proportionality and prior notification to ESMA. Nonetheless, the fact that the nuclear option is being discussed shows clear concern within the regulatory family.

Read the trio’s to-do list closely and you see the scale of the proposals:

• ESMA-run supervision for the major CASPs would further clamp down on member state autonomy and shift accountability to a single EU arbiter. 
• Tighter rules for EU intermediaries, requiring that all client orders are routed to a MiCA-authorized venue (or overseas venues deemed “equivalent” by ESMA). Liquid markets be damned. 
• Cyber-resilience is the other fixation: pre-authorization audits and periodic renewals would formalize bar raising on operational resilience.

Underneath, the notional driver is avoiding regulatory arbitrage - the jurisdiction shopping that can turn a single market into a patchwork if not managed effectively. The timing is no accident. ESMA’s July peer review of Malta’s MFSA authorization of a CASP praised the MFSA’s resourcing but flagged weaknesses in the assessment, a warning that divergence in standards can ripple EU-wide once passports are live. While the AMF, Consob and FMA have not named names in their latest missive, that episode is now an unsaid exhibit A for the push to raise the floor and reduce the incentive for CASPs to go jurisdiction shopping.

It should not be lost that ESMA supervision of the largest CASPs would be a major change to the regulator’s mandate and would be a significant deviation from the current approach to supervision of MiFID investment firms, for example, many of which are far larger than their CASP counterparts. The EU regulator currently only directly supervises credit rating agencies, third country central counterparties (CCPs), securities repositories and trade repositories - all critical central financial infrastructure. While the biggest CASPs are sizeable businesses, centralized supervision under ESMA would almost suggest the presence of crypto-related systemic risk. Are we really there?

Moving direct supervision to ESMA is also not a small task. It would require legislation, not a dear colleague letter. The Commission is already on the hook to review parts of MiCA and publish reports, and ESMA and the EBA are due assessments by year end. That gives Brussels the scaffolding for a potential targeted MiCA plus in 2026 if the politics line up. Until then, expect the internal squabbling to continue and the walls of Fortress Europa to continue to be built, to the detriment of liquidity and competitiveness. 

🌎 Global Developments 

🇺🇸 United States 

New SEC chair softens the tone and promises clarity before crackdowns 

Paul Atkins wants the Commission to focus on clear fraud and give firms notice before bringing action on technical breaches. That is a notable change in approach from recent years. Expect more guidance and fewer surprise sweeps, alongside work on tokenized securities and neater broker‑dealer rules so activity can happen onshore rather than in the shadows.

Businesses will be notified of technical breaches before the SEC takes action, with the agency pivoting away from sprawling record‑keeping penalty drives and towards cases with clear investor harm. He also trailed a firmer timetable for rulemaking on tokenized securities and broker‑dealers, and a more predictable consultation process. Early personnel moves across audit oversight point in the same direction, a reset towards due process and fewer ambushes.

SEC and CFTC staff outline Project Crypto coordination for spot products on registered venues 

On 2 September, the SEC’s Division of Trading and Markets and the CFTC’s Divisions of Market Oversight and Clearing and Risk issued a joint staff statement launching a cross‑agency initiative to coordinate how certain spot crypto‑asset products could be traded on SEC‑ or CFTC‑registered exchanges. The statement says existing law does not bar such listings, invites filings, registrations or requests for relief, and commits the organizations to work together on surveillance‑sharing, custody, margin and customer‑protection questions. It is a staff statement, not a rule change, but it makes the front door easier to find.

Next up is a joint SEC‑CFTC roundtable on regulatory harmonization on 29 September, open to the public and webcast, with agenda items likely to include leveraged or margined retail spot commodity transactions, perpetuals, portfolio margining, DeFi and 24/7 markets. The agencies also flag that they stand ready to engage with market participants, especially where proposals involve leveraged, margined or financed retail trading. 

SEC and Gemini near settlement on Gemini Earn 

The SEC and Gemini Trust told a New York court they have reached a resolution in principle to end the 2023 case over the Gemini Earn program, with both sides asking the judge to pause deadlines while the Commission completes its approval. A further status update is due by 15 December. The case alleged Earn was an unregistered securities offering; Genesis settled with the SEC in 2024, and New York actions have already secured significant restitution for customers.

If finalized, the deal would close one of the longest running crypto enforcement sagas and clears the decks for a cleaner rulemaking push under the new leadership. It also underlines the direction of travel: tidy up legacy lending products and move the conversation to registered venues and better disclosures, rather than litigating everything forever.

🇬🇧 United Kingdom 

Prudential and payments Bank of England eyes holding caps for systemic stablecoins 

The FT reports the Bank plans to consult on limits for how much sterling “systemic” stablecoin individuals and firms can hold, with a working range of £10,000 to £20,000 for retail users and about £10 million for businesses. Officials pitch the cap as a financial‑stability backstop to manage sudden deposit outflows if stablecoins scale in payments. That sets up a tug of war: the Bank’s systemic risk lens on one side, innovation and consumer choice on the other. Industry groups are already calling the idea costly to implement and likely to set the UK back in terms of innovation.

This debate has been brewing since November 2023, when the Bank set out its discussion paper on regulating systemic payment systems using stablecoins. The paper sketched backing‑asset, redemption and wallet standards, and reserved the Bank’s remit for systems that hit systemic scale in UK payments. A hard cap would sit alongside those controls as an extra guardrail, but it would also deliberately slow network effects while the rails bed in.

Open questions include whether any cap would be transitional, how it would be calibrated across retail and corporate users, and how it will mesh with the FCA’s issuer and custody rules. Industry voices frame the approach as anti‑innovation and overly cautious, warning it could push activity offshore and reduce consumer choice just as viable non‑bank options emerge. The Bank has flagged a fuller consultation on the systemic regime later this year, so expect more noise.

🇪🇺 European Union 

MiCA Authorizations Update

• 🇩🇪 eToro Europe Ltd - 16/09/2025
• 🇫🇮 Tesseract Investment Oy - 15/09/2025
• 🇩🇪 Bullish Europe GmbH - 04/09/2025
• 🇲🇹 Gemini Intergalactic EU Ltd - 21/08/2025

🇻🇳 Vietnam 

Vietnam launches five year crypto market pilot under tight local controls 

Hanoi has kicked off a five year pilot for a regulated crypto‑asset market through Government Resolution 05/2025/NQ‑CP, effective 9 September. The scheme sets a state‑managed framework for offering, issuing, trading and service provision, with the Ministry of Finance in the lead and other agencies in support.

The guardrails are substantial. Issuance and trading must be conducted in Vietnamese dong. Eligible crypto assets must be backed by real underlying assets, excluding securities and fiat money, so fiat‑backed stablecoins sit outside the scope. Only Vietnamese companies can issue, and licensed market‑organising service providers must be Vietnamese corporations with paid‑in charter capital of at least VND 10 trillion. Foreign ownership in those providers is capped at 49 percent. On the demand side, the pilot ring‑fences activity mainly to foreign investors, who must transact via licensed providers and use dedicated VND accounts at permitted banks. Heavy KYC, AML and cyber requirements apply, plus strict data retention and reporting.

For now this is a domestically anchored, dong‑settled experiment that aims to pull activity onshore without opening the floodgates. It limits retail excitement at home, but offers a route for institutional pilots and tokenized real‑world assets under close supervision. 

🔎 Things to Watch 

• 🏛️ Outputs of US BITCOIN Act roundtable.
• 🏛️ Post-recess progress on the US 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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