Regulators and Markets Race to Define Crypto's New Era

The UK’s Financial Conduct Authority (FCA) is in the final stages of developing a regulatory framework for cryptoassets, aligning its approach with international standards while emphasizing market flexibility and consumer protection. The proposed regime, outlined in the Financial Services and Markets Act 2000 (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025, introduces new regulated activities, including operating cryptoasset trading platforms, issuing stablecoins, and managing cryptoasset staking. These activities are subject to regulatory oversight by the FCA, with requirements for transparency, operational resilience, and prudential standards mirroring those in traditional finance . The regime also includes market abuse and admissions and disclosures frameworks, which will be detailed in upcoming FCA publications .

Under the new rules, qualifying cryptoassets are defined as fungible and transferable digital representations of value, excluding tokenized securities, e-money, or deposits. Qualifying stablecoins—those referencing fiat currencies and backed by fiat assets—fall within the scope of regulation, while non-fungible or non-transferable tokens are excluded . The FCA is consulting on specific rules for cryptoasset trading platforms, intermediaries, staking, and lending, including proposals to restrict certain products from being offered to retail investors due to their high-risk nature . The regulator is also considering imposing caps on credit-based crypto purchases to mitigate consumer debt risks, with an exception for stablecoins issued by authorized entities .

The UK is also witnessing a parallel regulatory development in the Gulf, where the Central Bank of Bahrain (CBB) launched the Stablecoin Issuance and Offering (SIO) Framework in July 2025, positioning the country as a leader in digital asset regulation. The SIO Module establishes a licensing regime for stablecoin issuers, requiring them to be locally incorporated as Bahraini Joint Stock Companies (BSCs) and to maintain minimum capital requirements. The framework mandates the segregation of client assets, secure custody arrangements, and transparent redemption processes, with the CBB retaining enforcement powers, including administrative and criminal penalties for serious violations . This comprehensive approach reflects Bahrain’s commitment to fostering innovation while ensuring financial stability and consumer protection .

In the U.S., the first spot ETFs for XRP and Dogecoin are set to launch on September 18, 2025, marking a significant expansion of crypto investment vehicles. REX Shares and Osprey Funds are launching the REX-Osprey XRP ETF (ticker: XRPR) and REX-Osprey Dogecoin ETF (ticker: DOJE), with each fund holding at least 80% in the underlying cryptoasset. The structure, registered under the Investment Company Act of 1940, allows for up to 40% exposure through other ETFs or derivatives, providing a diversified but still highly correlated framework to the price of XRP and DOGE . This development follows strong demand for altcoin futures at derivatives exchanges like CME Group, which plans to introduce options on XRP and Solana (SOL) futures in October .

The emergence of these ETFs signals a shift in the traditional finance landscape, with institutional and retail investors gaining regulated access to a broader range of digital assets. The products also highlight the growing legitimacy of altcoins like XRP and DOGE, which are increasingly being viewed as viable investment options alongside Bitcoin and Ethereum. As the U.S. market continues to diversify its crypto offerings, regulatory clarity and investor confidence will play a crucial role in shaping the trajectory of these assets .