How Crypto Laws Changed in 2025 - and How They'll Change in 2026

European crypto projects increasingly adopted regulatory compliance measures in 2025, aligning with new EU laws. VELO Protocol published a Markets in Crypto-Assets (MiCA) white paper in December 2025 to comply with EU Regulation 2023/1114. This move reflects the broader industry shift toward formal documentation for market access.

Lithuania issued a final deadline for crypto firms to secure MiCA licenses by December 31, 2025. Failure to comply would result in enforcement actions and loss of investor protections. The country's central bank emphasized the need for investor verification and asset transfers to licensed providers or personal wallets.

Crypto ETFs in the US saw significant inflows despite a pullback in December 2025. Investors poured $32 billion into spot Bitcoin and Ethereum ETFs, with BlackRock's iShares Ethereum Trust leading the pack. Analysts expected further growth in 2026 but warned of potential liquidations by the end of 2027.

Why Did This Happen?

MiCA mandated standardized documentation for crypto projects seeking EU market access. White papers became essential for regulatory compliance and institutional engagement. Projects like VELO Protocol used these documents to demonstrate preparation for EU operations.

Lithuania's MiCA enforcement underscored the need for crypto firms to align with EU standards. The country's central bank warned of enforcement actions against unlicensed operators. This approach aimed to reinforce market integrity and protect investors.

How Did Markets Respond?

Investor behavior in the US showed growing confidence in crypto ETFs. Farside Investors reported $12.6 billion in inflows for BlackRock's ETHA ETF, while Fidelity and Grayscale also saw significant gains. Despite recent volatility, ETFs remained a popular vehicle for institutional and retail investors.

Emerging platforms like Gemini and Crypto.com expanded into prediction markets, introducing new investment tools. These platforms faced competition from Kalshi and Polymarket, which had already gained significant traction in 2025.

What Are Analysts Watching Next?

Industry experts predicted continued growth in crypto ETFs and prediction markets in 2026. Bitwise estimated over 100 new crypto ETFs could launch under SEC's revised listing standards. However, Bloomberg analyst James Seyffart warned many might not survive past 2027 due to low demand.

Prediction market platforms are expected to reshape financial infrastructure. Kalshi and Polymarket processed over $44 billion in trading volume in 2025, with monthly volumes reaching $10 billion in November according to data. Their expansion into data partnerships with media outlets like CNN and CNBC signaled broader adoption.

Institutional adoption of crypto treasuries also grew, with over 200 public companies holding Bitcoin or other tokens. This shift contributed to a more stable valuation framework, reducing volatility and increasing transparency.

Legal challenges persisted for some projects. Balancer faced a class action lawsuit following a $128 million exploit in November 2025. Investors were advised to contact legal representatives for potential compensation. These developments highlighted ongoing risks in the crypto space.

As 2026 begins, regulatory clarity and institutional involvement are shaping the future of digital assets. Analysts expect continued growth in crypto ETFs and prediction markets, alongside increased scrutiny from regulators and investors.