Regulatory Roundup #21

Summary

The DTCC put tokenized securities into live production trades under an SEC no-action letter, the CFTC turned a single Kalshi approval into a listing route for crypto perpetuals, and the UK's Wholesale Digital Markets Champion set the same tokenization ambition down on paper while explaining why no equivalent shortcut exists under UK law. Japan finally moved crypto into its financial-markets law, raising the maximum penalty for unregistered operation from three years to ten. And Binance suspended EU services rather than complete MiCA authorization, with most of the affected money, by the firm's own telling, leaving the supervised perimeter entirely.

🔦 Spotlight

🇬🇧 Britain's tokenization push, the long way round

On 13 July, HM Treasury published the first report of its Wholesale Digital Markets Champion, Chris Woolard, formerly interim chief executive of the FCA. Woolard's brief is growth, and the report reads that way: a 54-firm taskforce, arranged into 9 Action Groups plus an Orchestration Group that Woolard chairs, has 12 months to move UK wholesale tokenization from pilots to live markets. The membership list is a decent measure of how far the perimeter has drifted, with Goldman Sachs and LME Clear sitting alongside Coinbase, Kraken and Wintermute. The headline numbers, up to £33 billion in additional annual output and £14 billion in tax revenue by 2035, come from a Barclays/PwC study and are conditional on the UK becoming one of the leading jurisdictions for tokenization.

Repo comes first. The taskforce wants a live, end-to-end tokenized repo trial, ideally by spring 2027, ahead of fixed income and uncleared OTC derivatives, and run across market infrastructure this time rather than as another bilateral pilot. DIGIT, the government's digital gilt pilot, is due no later than the first quarter of 2027, and the report asks the Bank of England to be prepared to accept DIGIT as collateral in the Sterling Monetary Framework. 

Later in this issue we cover the latest progress on the DTCC’s tokenization pilot, an exercise given space by an SEC no-action letter. Sadly, no equivalent statutory shortcut currently exists in the UK; the Woolard report states plainly that UK authorities cannot waive statutory requirements that way, and that formal legislative modification, the mechanism behind the Digital Securities Sandbox, is the only route available. The report allows itself one dry aside, noting that US no-action letters last three years "so are not any more permanent" (pretty much the HMT equivalent of admiring the neighbor’s new Range Rover and asking whether it’s on finance), then floats the mirror-image idea of inviting specific firms into the DSS "in the way the DTCC plays a role now in the US". Table 2 of the report runs through the areas still short of legal and regulatory certainty, each with a named owner: dematerialization of securities for the Treasury, collateral eligibility in the Sterling Monetary Framework for the Bank of England, a review of the CSD Regulation shared between the Treasury, the Bank and the FCA, a permanent prudential framework for the PRA, and a digital-asset custody policy, still unfinished, split between the Treasury and the FCA.

Measured against where the plumbing stands today, the timeline feels ambitious. The DSS has sixteen entrants, and HSBC became the first to pass Gate 2 on 13 July, allowing live activity under initial limits. The pipeline is therefore no longer entirely pre-live, but real activity remains concentrated in a single Gate 2 entrant.

Financial crime gets its own diagnosis, and it needs no Barclays/PwC study, since every compliance team can price the problem from experience. The report flags the lag that opens up when a tokenized asset's KYC, AML and sanctions-screening data has to move between platforms alongside the asset itself, proposes tasking UK Finance's Money Laundering Advisory Panel with coordinating an Action Group on the fix, and commits to taking the findings to the FATF. Custody policy makes its second appearance on the unfinished list.

None of this is buried. The PRA's 2026 Dear CEO letter, cited in the report rather than talked around, defers even the consultation on permanent prudential capital rules for these exposures until at least 2028, while the Basel Committee finishes its targeted review of cryptoassets. A spring 2027 repo trial would therefore run on interim prudential treatment, for assets whose custody rules are still being written, inside a sandbox with only one firm through Gate 2. 

Nevertheless, the long way round is still a viable route, and this is the first UK document that prints the whole map, potholes included. 

🌎 Global Developments

🇺🇸 United States

🏛 DTCC puts tokenized DTC assets into live trades

DTCC processed its first production tokenization trades on 15 July, seven months after the SEC issued its no-action letter authorizing DTC to run a tokenization service for the assets it custodies. More than 30 firms took part in the production initiative, spanning traditional institutions and digital-market participants, while DTCC says the wider industry working group now numbers more than 100 members and partners. At Talos, we were proud to be among the participants. The event ran equities and US Treasuries through collateral pledge, securities lending, Treasury and repo delivery-versus-payment, equity settlement, token transfer and CCP-margin workflows, with the service due to launch in October.

Statements: DTCC, Talos

🏛 CFTC turns one Kalshi approval into a broader crypto-perpetual route

The CFTC's 29 May order approved Kalshi's bitcoin perpetual as a futures contract, and the accompanying policy statement steered perpetuals referencing asset classes outside the order's scope, agricultural products and equities among them, into case-by-case CFTC pre-approval under Rule 40.3 rather than self-certification. For perps that fit the digital-commodity logic of that order, the ordinary Rule 40.2 self-certification route remains available. However, for asset classes the order did not contemplate, the Commission says that case-by-case Rule 40.3 review is the appropriate path. Kalshi has since used that opening to bring further crypto perpetuals to market. CME's 18 June suit against the Commission (Issue 20) remains unresolved.

The classification question CME raised, whether a perpetual is a swap under Dodd-Frank rather than a listed future, is still unresolved, and the market is building on the futures answer without waiting for a court to confirm it. By CME's account and subsequent reporting, more than a dozen crypto perpetuals were self-certified within a week, with trading volume past $1 billion. Those products pose a risk worth tracking. If CME’s suit prevails and the contracts are recharacterized as swaps, the framework those positions were built under would move beneath them, with consequences for venue registration, margin and eligible participants. 

🇪🇺 European Union

🟠 Binance suspends EU services, and most reported outflows leave the CASP perimeter

Binance withdrew its MiCA application from Greece's Hellenic Capital Market Commission on 24 June, six days before the transitional deadline. From 1 July it stopped new spot orders, deposits, sign-ups and Earn products for EU users, with withdrawals staying open through the wind-down. The firm says it will reapply in another member state, so the suspension is presented as temporary rather than an exit.

Co-CEO Richard Teng told Reuters NEXT Asia on 9 July that roughly 70% of affected withdrawals went to self-hosted wallets and only 30% to MiCA-licensed platforms, a split Binance has not substantiated and one it uses to argue the regime has misfired. Whatever the numbers, ESMA's own wind-down guidance names a self-hosted wallet as an acceptable destination alongside an authorized CASP.

A regime built to pull crypto users inside the supervised perimeter has, in Binance’s view, moved a meaningful share of reported outflows outside it, into wallets outside supervised institutions. The more practical challenge for other EU CASPs then becomes assuring the provenance of assets held within those self-hosted wallets if and when their owners seek to bring them back inside the EU regulatory perimeter. Screening assets transferred directly from Binance is comparatively simple. Screening assets previously held in self-custody is not necessarily so. Potentially good news on job security for those working in CASP AML teams.

🌏 Asia-Pacific

🇯🇵  Japan

⛩️ Japan's crypto legislation clears the Diet

The House of Councillors passed the FIEA amendment on 15 July, completing the enactment that we previously flagged as awaiting an Upper House vote. The law moves crypto out of the Payment Services Act and into the Financial Instruments and Exchange Act, treating cryptoassets as financial products distinct from securities. It also imports securities-style disclosures, insider-trading prohibitions and unregistered-operator controls, and raises the maximum penalty for running an unlicensed exchange from three years to ten. The regime should be in full effect in 2027.

Two further legislative changes come alongside but sit outside the FIEA text. On tax, the enabling statute is already law, enacted on 31 March, but what remains is commencement, which is tied to the FIEA amendment taking effect. If that happens during 2027, a flat separate-taxation rate of around 20%, down from a top marginal rate near 55%, would begin on 1 January 2028 and apply only to eligible cryptoassets handled through registered operators. On products, the move into the FIEA opens a legal pathway to spot crypto ETFs, which Tokyo exchange operators associate with 2027. Next steps are the subordinate FSA rules and the commencement date that will start the tax clock.

🇰🇷  South Korea

🏯 Seoul sets a September date for its stablecoin bill

Korean press reports say the ruling party and financial authorities, the FSC, the Bank of Korea and the Financial Supervisory Service, have set out a roadmap to reintroduce the Digital Asset Framework Act in September and to publish implementation milestones fortnightly. The commitment to a cadence is the new element. The Bank of Korea continues to back a model under which banks would collectively hold at least 51% of a won-stablecoin issuer, a proposal the FSC regards as too restrictive and one that remains unresolved. September will show whether the cadence produces a bill or simply more meetings.

🔎 Things to Watch

• 🇺🇸  CLARITY Act: a combined Senate Banking and Agriculture draft was expected to reach the floor as soon as the week of 20 July, with ethics, federal pre-emption, the SEC and CFTC appointments, and stablecoin-yield language all still largely unresolved at the time of print. Roughly three Senate weeks remain before the August recess, and Polymarket has put year-end passage odds at near 43% as at 21 July.
• 🇺🇸  SEC Regulation Crypto: three rulemakings carry July target dates; the offering-and-sale package has sat at OIRA since 20 March. Publication awaited.
• 🇺🇸  GENIUS Act rulemaking: the 18 July statutory rulemaking deadline passed without a coordinated set of final rules; the joint customer-identification NPRM stays open for comment until 21 August.
• 🇺🇸  CFTC perpetuals / CME vs. CFTC: the suit over the Kalshi approval remains unresolved while further crypto perpetuals reach the market under the 29 May framework, with Rule 40.3 review flagged for asset classes outside the approved order.
• 🇺🇸  California DFAL: the license application deadline fell on 1 July; digital-asset activity with a California resident now requires a DFPI license, a pending application, or an exemption.
• 🇺🇸  DTCC Tokenization Service: limited production trades began 15 July; full launch targeted for October.
• 🇪🇺  MiCA: transitional period expired 1 July with no extension. Poland remains the only member state without implementing law after a third presidential veto, so the KNF cannot process CASP applications; its historical virtual-currency register lists over 1,800 numbered entries, including inactive and deregistered businesses, and firms wanting to serve Polish clients now need MiCA authorization from another member state and a passport in.
• 🇪🇺  EU Commission MiCA review: targeted consultation deadline 30 September.
• 🇬🇧  FCA: the authorization gateway (application period) opens 30 September and closes 28 February 2027, ahead of the regime going live on 25 October 2027. Further guidance consultations, including on DeFi, are due later in 2026.
• 🇬🇧  Bank of England systemic stablecoin Code: consultation closes 22 September; final Code due by end-2026.
• 🇬🇧  HM Treasury Wholesale Digital Markets Champion: Action Group membership and chairs due to be finalized in September; feedback on the report closes 4 September; first live tokenized-repo trial targeted for spring 2027.
• 🇯🇵  Japan: FIEA amendment enacted 15 July; the 20% crypto tax statute is already law (enacted 31 March) but its commencement is tied to the FIEA amendment taking effect, putting the rate at 1 January 2028 at the earliest. Subordinate FSA rules and the spot-ETF pathway (2027) are still to be settled.
• 🇦🇺  Australia: ASIC AFSL lodgement deadline 30 September; Digital Assets Framework Act commences 9 April 2027.
  

Coming into view:

• 🇺🇸  CME vs. CFTC: the outcome decides whether onshore perpetuals are regulated as futures or swaps, and therefore whether a growing book of self-certified contracts holds its footing.
• 🇸🇬  Singapore: MAS plans a future trial issuance of tokenized MAS Bills to primary dealers, settled using wholesale CBDC; further details are expected in 2026.
• 🇪🇺  EU MiCA review report: a legislative proposal could follow in 2027 if the review recommends amendment.

‍

^{DISCLAIMER: The views and opinions expressed herein are those of the author(s) and do not necessarily reflect the views of Talos Global, Inc. or its affiliates (collectively, "Talos") and summarizes information and articles with respect to cryptocurrencies or related topics. This material is for informational purposes only and is only intended for sophisticated institutional investors, and is not (i) an offer, or solicitation of an offer, to invest in, or to buy or sell, any interests or shares, or to participate in any investment or trading strategy, (ii) intended to provide accounting, legal, or tax advice, or investment recommendations, or (iii) an official statement of Talos. No representation or warranty is made, expressed or implied, with respect to the accuracy or completeness of the information or to the future performance of any digital asset, financial instrument or other market or economic measure. The information is believed to be current as of the date indicated and may not be updated or otherwise revised to reflect information that subsequently became available or a change in circumstances after the date of publication. Talos and its employees do not make any representation or warranty, expressed or implied, as to accuracy or completeness of the information or any other information transmitted or made available. Investing in cryptocurrency comes with risk. Certain statements in this document provide predictions and there is no guarantee that such predictions are currently accurate or will ultimately be realized. Prior results that are presented here are not guaranteed and prior results do not guarantee future performance. Recipients should consult their advisors before making any investment decision. Talos may have financial interests in, or relationships with, some of the assets, entities and/or publications discussed or otherwise referenced in the materials. Certain links that may be provided in the materials are provided for convenience and do not imply Talos's endorsement, or approval of any third-party websites or their content. Any use, review, retransmission, distribution, or reproduction of these materials, in whole or in part, is strictly prohibited in any form without the express written approval of Talos.}