Regulators and Privacy Clash as Global Crypto Rules Take Shape

The U.S. Securities and Exchange Commission’s (SEC) Crypto Asset Working Group is set to convene a roundtable on October 17, focusing on the intersection of digital asset regulation and privacy. This event aligns with recent legislative and regulatory movements across the U.S. and Europe, particularly as the Senate advances the Responsible Financial Innovation Act of 2025, aiming to clarify the regulatory framework for tokenized assets and digital currencies. The bill, led by Wyoming Senator Cynthia Lummis, seeks to prevent ambiguity in whether tokenized securities fall under the SEC or the Commodity Futures Trading Commission (CFTC) jurisdiction. The provision ensures that tokenized stocks are treated as securities, maintaining alignment with existing broker-dealer and clearing frameworks. The Senate Banking Committee is expected to vote on the SEC-related components this month, with a full Senate vote potentially occurring in November.

The debate extends beyond U.S. borders, with the European Union (EU) finalizing its Markets in Crypto-Assets (MiCA) Regulation, which will take effect in 2027. The regulation aims to increase transparency in the crypto sector by prohibiting anonymous transactions and banning privacy-focused cryptocurrencies like Monero and Zcash on EU-regulated platforms. A new supervisory body, the Anti-Money Laundering Authority (AMLA), will begin monitoring major crypto firms, imposing mandatory identity checks for transactions exceeding €1,000. The EU's approach reflects a broader shift toward stricter oversight, emphasizing financial transparency and investor protection. However, the policy has drawn criticism from privacy advocates, who argue it undermines the foundational principles of cryptographic privacy and innovation.

In the U.S., the Senate’s Responsible Financial Innovation Act also includes provisions to protect software developers and non-custodial service providers, responding to concerns raised by over 112 crypto firms and advocacy groups. These entities warn that outdated regulatory interpretations risk misclassifying developers as financial intermediaries, further driving talent away from the U.S. to more accommodating jurisdictions. Data from Electric Capital highlights the decline in the U.S. share of open-source blockchain developers, from 25% in 2021 to 18% in 2025. This trend underscores the importance of clarifying legal boundaries to maintain the country’s competitive edge in blockchain innovation.

The regulatory landscape is further shaped by recent actions in the U.S., including President Donald Trump’s signing of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. This law sets strict reserve requirements for stablecoins, mandating that they be backed by highly liquid assets such as cash and short-term U.S. Treasury bills. The act aims to enhance consumer protections and reduce the risks associated with stablecoin mismanagement. However, concerns remain regarding the potential impact on monetary sovereignty, with European Central Bank President Christine Lagarde cautioning against the dominance of U.S.-pegged stablecoins in the Eurozone.

Amid these regulatory efforts, the SEC’s upcoming roundtable presents a pivotal moment for stakeholders to voice concerns and shape the future of digital asset regulation. The event is expected to influence the development of a coherent framework that balances innovation with investor protection and financial stability. As both the U.S. and the EU continue to refine their approaches, the global crypto market remains in a dynamic phase, with regulatory clarity emerging as a critical factor in fostering sustainable growth and trust among market participants.

Source:

[1] Senate crypto bill adds clause to keep tokenized stocks (https://cointelegraph.com/news/senate-crypto-bill-tokenized-securities-clarification)

[2] EU Targets anonymous crypto with 2027 ban on privacy coins and accounts (https://cryptodnes.bg/en/eu-targets-anonymous-crypto-with-2027-ban-on-privacy-coins-and-accounts/)

[3] Crypto Rules in Europe vs. the US: Does Your Stablecoin Matter? (https://finance.yahoo.com/news/crypto-rules-europe-vs-us-184431208.html)

[4] Crypto Regulation in the USA, UAE and EU: A Full Comparison (https://irinauae.law/en/blog/crypto-regulation-usa-uae-eu)