Regulatory Roundup #6

Weekly Summary

This week was less about passing laws and more about rehearsing them. In Washington, senators circled the crypto market structure bill like actors in a table read, arguing not just over the script but whether the production should even go ahead while an ethics subplot plays out. The White House insists the bill is still a priority; the chamber insists on drama first, legislation later.

In the UK, the FCA unveiled how it plans to drape its Handbook over cryptoasset firms, complete with SYSC, FIT and COCON, while also reminding algorithmic traders that “governance” needs more than a Slack channel. Across the Atlantic, the US and UK rediscovered their special relationship with a joint crypto taskforce, which sounds promising until you remember how many previous “special” initiatives ended up quietly shelved.

Europe dusted off the Digital Euro and pencilled in a possible launch date for 2029, a timeline so leisurely that the Sagrada Familia might be finished first. Meanwhile, Australia showed it finally has the regulatory pen in hand with a draft law for digital asset platforms. 

🔦 Spotlight

🏛️ Senate turf war over market structure

The Senate’s long-promised attempt to write the rules of the road for crypto has descended into the sort of Beltway melodrama that could make even seasoned Hill-watchers groan. On the one side, Democrats insist that any market structure bill must be genuinely bipartisan in authorship, not just dressed up as such once the ink is dry. On the other, Republicans argue that momentum is everything and that delay is as good as defeat.

Into this already fraught mix strolls the White House’s newly minted crypto lead, Patrick Witt, loudly declaring that market structure legislation is a top priority. Witt is trying to project urgency: pass the bill, show the world that Washington can put guardrails around digital assets, and notch a political win before the year runs out. All very plausible, if the chamber weren’t so busy acting out its own soap opera.

The real fight, though, is not about definitions of securities or which regulator gets which sandbox. It is about ethics. A clutch of senators are now linking their support for the bill to a sprawling investigation request into alleged conflicts of interest involving Trump associates and a UAE deal with crypto overtones. For them, passing the bill without resolving those questions would look like rubber-stamping business as usual, with a side order of corruption.

That linkage has turned what could have been a dry committee squabble into open warfare. Every line of the bill is now hostage to whether the ethics probe gathers steam, whether subpoenas fly, and whether political mud-slinging trumps legislative drafting. Crypto may have been promised clarity, but it is currently caught in the crossfire of a much older Washington pastime: scandal management.

The irony is that both parties actually want a bill. Republicans are desperate to show they can deliver something beyond rhetorical support for innovation. Democrats would like to prove that regulation can be tough and forward-looking at the same time. But instead of hammering out the details of custody standards or exchange obligations, they are busy arguing about who shook hands with whom in Dubai.

The net effect is less legislative clarity and more a fog machine wheeled into committee. Traders can take comfort in the fact that Bitcoin does not care who chairs the Banking Committee. Everyone else is left watching a familiar Washington drama: grand declarations of urgency, followed by months of trench warfare over side-plots only tangentially related to the bill itself.

And so the “special relationship” that really matters this autumn is not between Washington and London, but between market structure and political scandal. For now, it is less about designing a regulatory framework and more about waiting to see which senator blinks first.

🌎 Global Developments

🇺🇸 United States

🏛️ Treasury opens the comment gates on the GENIUS Act

The United States Treasury has kicked off an advance notice and request for comment to implement the new stablecoin law. The notice asks for input across consumer protection, illicit finance, financial stability and compliance, with submissions to be filed via Regulations.gov after Federal Register publication. This follows an earlier request focused on novel methods to detect illicit activity in digital assets, which closes in October. Expect a long, iterative rulemaking cycle, but the starting gun has fired.

Practical takeaway: stablecoin issuers, platforms and trading firms should respond on reserve assets, disclosure cadence and wallet-level controls, and on how anti-abuse tooling works in crypto market microstructure. Silence now means less chance to shape calibration later, and the final rules will set operational baselines that flow straight through to venue connectivity, treasury operations and capital planning.

🇪🇺 European Union

💶 Finance ministers set roadmap for the Digital Euro

EU finance ministers have backed a roadmap for the Digital Euro, agreeing that any central bank digital currency should be designed to reduce reliance on Visa, Mastercard and other non-European providers. Ministers stressed that issuance remains years away, but the policy direction is now clearer: a retail CBDC, distributed through banks and payment service providers, with the European Central Bank controlling the core infrastructure. The emphasis is on resilience, privacy and interoperability within the EU’s single market. 

The ECB has already confirmed that design work will continue at pace, but officials caution that rollout is unlikely before the end of the decade. Executive Board member Piero Cipollone told Bloomberg that mid-2029 is a realistic earliest launch window. The political buy-in from finance ministers gives the project new legitimacy, but the timeline reflects the complexity of balancing privacy, AML expectations, offline usability and competition safeguards. 

For market participants, the implications are double-edged. On the one hand, a Digital Euro could provide a low-cost settlement asset across EU trading venues, reducing dependency on bank money in stressed markets. On the other, questions linger over how the ECB will manage distribution, how deposits might shift, and what limits will be imposed to prevent disintermediation of commercial banks. For crypto and stablecoin players, the key takeaway is that Europe is serious about a sovereign alternative, but the competitive field remains open for at least the next four years.

🇬🇧 United Kingdom

💼 FCA CP25/25: how the FCA Handbook will bite for regulated cryptoasset activities

The FCA’s CP25/25 sets out how core parts of the Handbook would apply once HM Treasury’s new RAO activities for cryptoassets go live. The scope is wide: issuing qualifying stablecoins, safeguarding qualifying cryptoassets and specified-investment cryptoassets, operating a cryptoasset trading platform, intermediation and staking all come under the FCA’s remit when the Statutory Instrument lands. The paper maps crypto firms to familiar expectations for FSMA-authorised firms, covering PRIN (excluding the Consumer Duty at this stage), SYSC, COCON, COND, FIT, GEN, ESG, SUP and DEPP, with added non-Handbook guidance for operational resilience under SYSC 15A. Consultation closes 12 November 2025 for Chapters 1-5, and 15 October 2025 for the discussion chapters. Don’t be shy.

For trading firms, two pillars matter immediately. First, governance and accountability under SM&CR and SYSC - think clear algorithm ownership, credible three lines of defence, fitness and propriety, and decision trails that can be called upon at a moment’s notice. Second, operational resilience and financial crime: the FCA wants robust arrangements to prevent, respond to and recover from incidents, alongside crime-reduction by design across onboarding, transfers, and venue operations. If you plan to operate or connect to a UK CATP, expect scrutiny of market integrity controls, surveillance fit for crypto market microstructure, and technology change management that looks rather more TradFi than “move fast and fix later”. 

Crypto firms are going to get (nearly) the full FSMA experience. The FCA is explicitly kicking the tires on how, or whether, to apply the Consumer Duty, COBS and PROD to crypto, plus whether DISP and access to the Financial Ombudsman Service should extend to these activities. None of that is final; it is a live discussion intended to shape later activity-specific rules in the “Crypto Roadmap”. In other words, firms will get the cross-cutting spine now, with product- and activity-level muscle to follow. Sensible next steps are to run a Handbook gap analysis, stand up a SYSC-anchored controls inventory, and pressure-test incident, outsourcing and data-integrity playbooks against SYSC 15A.

🤖 FCA multi-firm review: algorithmic trading controls: crypto algo shops, take note

The FCA’s August 2025 multi-firm review of principal trading firms’ RTS 6 controls calls out recurring weaknesses in governance, documentation, change management and testing, while highlighting better practice such as complete algorithm inventories with named owners, robust deployment gates, internal pre-trade risk limits, and technically literate compliance challenge. There are no new rules here, but the supervisory heat is unmistakable. 

Why it matters for crypto firms: FSMA-authorised crypto algorithmic trading firms will be expected to evidence the same discipline the FCA sees in mature TradFi shops. If you run or connect algos to a UK CATP, treat the review as a checklist for what supervisors will ask first - from simulation and conformance testing to abuse surveillance that actually matches your strategies and venues.

🇺🇸🤝🇬🇧 US-UK “special relationship” gets a crypto taskforce

The UK Treasury and the US Treasury have launched a joint taskforce on crypto regulation, with industry quick to frame it as a revival of the “special relationship”. The initiative will examine stablecoins, market integrity and cross-border supervisory co-operation, aiming to avoid regulatory gaps that traders and issuers could exploit. It is also pitched as a way to align rulemaking under the US GENIUS Act and the UK’s incoming RAO regime so that stablecoin and exchange operators are not forced into expensive parallel compliance tracks. 

The fanfare matters politically as much as technically. After a year of transatlantic divergence on everything from stablecoin reserves to exchange oversight, the optics of Treasury-to-Treasury collaboration give cover to legislators and regulators who want to claim international legitimacy. For trading firms, the real question is whether joint work produces common standards on reserve composition, disclosures and abuse surveillance that can be plugged into systems once, rather than rebuilt jurisdiction by jurisdiction. Until then, the “special relationship” will be judged less by speeches and more by whether it narrows basis risk in cross-border crypto operations.

🌏 Asia-Pacific

🇦🇺 Australia

📜 Draft Digital Asset Platform Regulation Bill released for consultation

Treasury has published exposure draft legislation that would pull crypto platforms inside the Australian Financial Services (AFS) perimeter. The Digital Asset Platform Regulation Bill 2025 would require operators that hold, match, or otherwise deal with customer digital assets to obtain an AFS licence or operate through an AFS licensee, meet custody and asset segregation standards, maintain appropriate capital and insurance, and comply with client‑money and disclosure rules. A tiered approach is proposed so smaller providers below set activity thresholds face lighter requirements, with a transition period to minimise disruption.

For trading venues and brokers, the signal is clear: if you provide wallet infrastructure, run an order book, or arrange access to third‑party platforms for Australians, you should plan for AFS‑style obligations across governance, incident response, outsourcing and reporting. The accompanying explanatory materials and factsheet flag alignment with stablecoin reforms and scope to extend or tailor obligations through rules, which means calibration can tighten quickly once the framework is in place.

📲 ASIC backs stablecoin growth with class relief for distributors

ASIC has granted class relief for intermediaries that conduct secondary distribution of an Australian stablecoin issued by an AFS-licensed issuer, removing the need for a separate AFS, market, or clearing and settlement facility licence. Distributors must make the issuer’s product disclosure statement available to clients where one exists. The relief will begin once the instrument is registered, and ASIC says it may extend the relief as more eligible issuers obtain licences. The move sits alongside ASIC’s broader crypto guidance work and follows sandbox activity such as Project Acacia.

🇨🇳🇭🇰 China and Hong Kong

🌐 Hong Kong’s RWA ambitions hit a mainland speed bump

China has quietly asked major mainland brokerages to hit pause on their tokenisation of real-world assets in Hong Kong, a move that casts a shadow over the city’s ambition to become the region’s tokenisation hub. The guidance, reportedly delivered through regulatory channels, reflects unease in Beijing about fast-growing offshore markets and the potential leakage of financial activity beyond its direct control. For firms like GF Securities and CMBI, the request lands just as Hong Kong regulators have been promoting tokenisation pilots and legal frameworks to attract global capital. 

The episode highlights the delicate balance: Hong Kong wants to lead in innovation and international credibility, while Beijing prioritises capital management and political oversight. For traders and issuers, the message is that RWA plays linked to China carry heightened policy risk, even if Hong Kong’s sandbox and legal reforms keep the door open for international participants.

🔎 Things to Watch

• 🇺🇸 US Senate progress/bickering on market structure regulation.
• 🇬🇧 FCA CP25/25 - response deadlines - 15 October and 12 November.
• 🇦🇺 Australian Digital Asset Platform Regulation Bill - response deadline - 24 October

Coming into view:

• 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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