Key Takeaways
The new year has barely begun but already across the world there have been seismic movements in the crypto landscape.
With big movements underway at the Securities and Exchange Commission (SEC) – in terms of both leadership and policy – and Europe’s implementation of stringent new regulations, 2025 promises to be a year of change in the crypto space.
Here’s a guide to the state of crypto regulation as we begin 2025.
Blockchain technology represents a transformative shift in how all assets are represented, owned, and transferred.
Any regulatory agenda should aim to create a framework that seeks a sensible balance between innovation, market integrity, and consumer protection.
The foundation for how to achieve this balanced regulation is proper classification of tokens based on their inherent characteristics and aligning any regulations with existing frameworks insofar as possible.
This will provide clarity and consistency across both the crypto-asset and traditional markets in a technology-neutral manner.
We should keep in mind that blockchain is part of the internet and, therefore, inherently global. Therefore, context-appropriate regulation is essential to ensuring policies that are both effective and adaptable.
Through education, collaboration, and workable regulation, the U.S. can empower stakeholders to harness the full potential of blockchain technology, driving economic growth and societal benefits and solidifying U.S. leadership.
If one thing is certain, it is that the Trump administration’s attitude towards the blockchain and crypto industry will be more progressive than that of the previous administration.
Trump presented himself as a pro-crypto candidate and, with a Republican majority in both houses of Congress, it is likely that his views will have a significant influence in the policies and laws that will be enacted.
This should foster a period of growth in 2025 and beyond. Efforts to pass regulations around market structure and stablecoins remain the top priorities for the industry, and there will be a lot to keep Congress busy on these two fronts.
One of the more significant actions likely to take place in 2025 is the repeal of Staff Accounting Bulletin 121 (SAB 121).
The introduction of SAB 121 by the SEC was detrimental to the adoption of crypto-assets because it required public companies that custody crypto-assets on behalf of their customers to record such assets on their balance sheet – unlike other custodial assets.
As a result of SAB 121, many banks were reluctant to progress their crypto strategies. The repeal of SAB 121 – which was proposed and passed in both houses of Congress in 2024 but was vetoed by President Biden – is likely to happen early in 2025.
Where the SEC is concerned, Trump has long spoken of his wish to “fire” Chairman Gary Gensler.
Appointed by Biden, Gensler has brought multiple enforcement actions against crypto firms in his tenure and has taken a generally tough stance on all things blockchain.
As many had expected, Gensler announced his departure effective January 20, 2025, with Token Alliance co-chair Paul Atkins nominated to take his place.
As a result, future SEC regulation of the sector is likely to be more thoughtful and workable, paving the way for greater innovation and mainstream adoption.
Across the pond, the Markets in Crypto-Assets Regulation (MiCA or MiCAR) was enacted in 2023.
Though this framework is intended to govern crypto-assets in the 27 member states of the EU, it has broader global significance as it applies to any crypto company that deals with European customers, no matter where the company is located or registered.
MiCA is the result of a lot of hard work, industry input, and political compromise. January 2025 marks the beginning of the third phase of its implementation, where organizations classified as Crypto-Asset Service Providers (CASPs) must obtain licenses to operate in the EU.
This process is complex, with CASPs first needing to opt for the appropriate category depending on their business type. They must then compile paperwork showing they have capital adequacy and appropriate governance structures.
CASPs must also ensure that all of their business processes align with anti-money laundering (AML) and Know Your Customer (KYC) regulations, among many other requirements.
Member state regulators also need to finalize their application processes, which will apply at the national level.
All CASPs will be expected to be fully compliant with MiCA by July 2026. However, regulators may struggle to approve applications for trading venues and custodians due to the high expected volume as well as the complexity and novelty of the regime.
MiCA’s intention is to create a more unified regulatory landscape for crypto and web3—and potentially a set of regulations that other jurisdictions can use as a guide to creating their own.
Nonetheless, the onerous obligations risk ossifying the technology and stifling innovation in the medium term.
Crypto organizations may choose to do business elsewhere to avoid the regulatory burden.
In the U.K., the Financial Conduct Authority (FCA) published a crypto blueprint in November 2024, setting out the road ahead for crypto-asset regulation.
There will be several consultations this year and next, with a final set of rules to be published in 2026.
At first blush, the U.K. government’s proposals look to be more flexible and innovation-friendly than those of its European neighbors.
For example, their decision not to bring stablecoins under the existing payment regime recognizes that doing so would likely result in a disproportionate regulatory burden.
The government has also indicated that crypto-asset staking services would not be considered collective investment schemes, which will likely pave the way for more staking service providers to establish themselves in the country.
Elsewhere in the world, Hong Kong is making a play to be considered the APAC region’s leading crypto hub, outlining its stablecoin regulations and focusing on tokenization initiatives as a way to increase innovation in the territory’s financial sector.
The Hong Kong Monetary Authority (HKMA)’s rules on stablecoins involve licensing stablecoin issuers with a focus on honesty and accuracy in the marketing and advertising.
While the full regulations are not yet finalized, industry consultations began in mid-2024, and it is anticipated that the final laws will attempt to strike a balance between protecting consumer interests and encouraging innovation.
While regulation is necessary to protect consumers, we must allow room for industries to evolve. Crypto assets offer the potential to transform entire economies, but success requires an environment that nurtures experimentation and innovation.
It is vital that lawmakers and regulators have a deep understanding of the underlying technologies that power the regulated activities they govern.
The U.S. is expected to take a more reasonable, pro-growth approach toward blockchain and crypto, and there is cautious optimism for the same in the U.K. and Hong Kong.
As for the EU, we will be paying close attention to the rollout of MiCA and how successful it will be at attracting crypto businesses to the region.
The regulatory developments set out for 2025 may be varied, but there is still reason to have confidence in crypto’s future.
Greater focus and collaboration will enable a mature ecosystem capable of significant transformation.