Regulators Rewrite the Rules: The Global Crypto Battle for Stability and Control

The European Union is solidifying its position as a global leader in cryptocurrency regulation with the implementation of the Markets in Crypto-Assets Regulation (MiCA), a comprehensive regulatory framework that harmonizes digital asset rules across all 27 EU member states. MiCA, enacted in 2023, aims to reduce market fragmentation, foster innovation, and enhance investor protection by establishing clear rules for the issuance and trading of digital assets, including stablecoins. By creating a unified regulatory approach, the EU is fostering a stable environment for businesses and investors while ensuring transparency and financial stability [1].

The MiCA framework distinguishes between three primary types of crypto assets: e-money tokens, asset-referenced tokens, and utility tokens, excluding non-fungible tokens (NFTs) and other unique digital assets. Stablecoins, in particular, are subject to stringent reserve requirements, operational standards, and transparency rules to ensure financial resilience and consumer confidence [1]. Issuers of e-money tokens must publish white papers, maintain 100% reserve backing, and provide clear redemption rights for holders. These measures aim to prevent insolvency risks and ensure that stablecoins remain reliable mediums of exchange [1]. Additionally, MiCA imposes strict anti-money laundering (AML) and anti-terrorist financing (CTF) requirements, aligning the digital asset sector with established financial compliance standards [1].

In the United States, the Treasury Department has taken a proactive step toward regulating digital assets with the implementation of the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act). Enacted in July 2025 and signed into law by President Donald Trump, the GENIUS Act establishes a comprehensive regulatory framework for payment stablecoin issuers. The legislation prioritizes consumer protection, strengthens the U.S. dollar’s reserve currency status, and enhances national security. Key provisions include the requirement for stablecoin issuers to be treated as financial institutions under the Bank Secrecy Act, subjecting them to AML and CTF obligations [2]. The act also mandates reserve requirements and clear redemption procedures, ensuring that stablecoins maintain their value and stability [2].

The U.S. Treasury’s efforts to regulate digital assets are further supported by Executive Order 14178, issued on January 23, 2025, which aims to strengthen American leadership in digital financial technology. The order established the President’s Working Group on Digital Asset Markets, tasked with preparing a report on regulatory and legislative proposals to advance U.S. policies in the digital asset space. The group’s recommendations include improving AML/CFT frameworks, evaluating the use of digital identity verification, and enhancing public-private cooperation through initiatives like FinCEN’s 314(a) and 314(b) programs [2]. These initiatives reflect a broader strategy to integrate digital assets into the U.S. financial system while mitigating risks associated with illicit finance.

To further refine the regulatory landscape, the U.S. Treasury has launched a Request for Comment under the GENIUS Act, inviting public input on innovative methods to detect and mitigate illicit finance risks involving digital assets. The request focuses on technologies such as application program interfaces (APIs), artificial intelligence (AI), digital identity verification, and blockchain monitoring. These tools are critical for enhancing compliance efforts but also present challenges related to cost, privacy, and operational efficiency. The Treasury aims to evaluate the effectiveness of these methods in reducing illicit finance risks while ensuring that financial institutions can implement them without undue burden [2].

In parallel, the U.S. banking sector has raised concerns about potential loopholes in the GENIUS Act, particularly regarding the payment of interest on stablecoin accounts. Industry groups such as the American Bankers Association and the Bank Policy Institute have urged Congress to close this loophole, arguing that it could expose stablecoin issuers to the risk of runs and undermine the act’s regulatory goals. The debate highlights the evolving nature of stablecoin regulation and the need for continuous refinement to address emerging risks [3].

Globally, jurisdictions such as Singapore, Switzerland, and Dubai have also developed robust regulatory frameworks for digital assets. Singapore’s Payment Services Act (PSA) and the 2023 stablecoin regulatory framework emphasize a risk-based approach, ensuring that innovation thrives within a transparent and well-supervised financial system. Switzerland relies on a modular, principles-based approach, applying existing financial market laws to digital assets and leveraging guidance from the Swiss Financial Market Supervisory Authority (FINMA). Dubai, through its Dubai International Financial Centre (DIFC), has created a structured licensing regime that includes strict criteria for stablecoin issuers and comprehensive market integrity provisions [1].

As digital asset regulation continues to evolve, jurisdictions are increasingly focusing on harmonizing their frameworks with broader efforts to modernize financial infrastructure. The integration of blockchain-based technologies into core financial systems, such as wholesale payments and clearing, represents a significant step toward improving efficiency and reducing risk. Initiatives like Fnality, a blockchain-based wholesale payments firm, demonstrate the potential of digital assets to transform traditional financial operations while maintaining regulatory compliance [1].

The ongoing engagement between regulators, industry participants, and international partners is essential for maintaining a dynamic and credible regulatory framework. Regular consultations, cross-border cooperation, and enforcement mechanisms are critical for addressing emerging risks and ensuring that digital asset markets remain resilient and trustworthy. As the market matures, regulatory regimes will likely continue to adapt, reflecting the need for continuous refinement and jurisdictional coordination to shape the future of digital assets.

Source:

[1] Structural Themes in Global Digital Asset Regulation (https://businesslawtoday.org/2025/08/structural-themes-in-global-digital-asset-regulation/)

[2] Request for Comment on Innovative Methods To Detect Illicit Activity Involving Digital Assets (https://www.federalregister.gov/documents/2025/08/18/2025-15697/request-for-comment-on-innovative-methods-to-detect-illicit-activity-involving-digital-assets)

[3] Crypto Regulatory Affairs: Private Sector in U.S. and Hong Kong Push for Changes in New Stablecoin Rules (https://www.elliptic.co/blog/crypto-regulatory-affairs-private-sector-in-us-and-hong-kong-push-for-changes-in-new-stablecoin-rules)