The first half of 2025 brought significant developments in the regulation of digital and cryptoassets in the UK and EU. In this half-year update, we review these and look ahead to likely developments in the second half of 2025.
The first half of 2025 brought significant developments in the regulation of digital and cryptoassets in the UK and EU. In this half-year update, we review these and look ahead to likely developments in the UK and EU in the second half of 2025.
In the UK, HM Treasury published key draft legislation establishing the regulatory framework for cryptoassets, and the UK Financial Conduct Authority (FCA) also published a number of consultation and discussion papers on cryptoasset regulation. Further developments are expected in this area, including the UK Prudential Regulation Authority’s consultation on implementing the Basel standard for the prudential treatment of cryptoassets, later in 2025.
For the EU, the Market in Crypto-Assets Regulation (MiCA) became fully applicable starting 30 December 2024. A number of member states have begun issuing MiCA authorisations to cryptoasset service providers in their jurisdictions, and EU officials continue to develop the regime with the publication of supervisory guidance and new delegated regulations to supplement the framework. Notably, the European Commission has not yet published its report on the latest developments with respect to cryptoassets, which is required under Article 142 of MiCA and has been expected since the end of 2024.
More generally, international interest in the development of cryptoassets continues. The Bank for International Settlements (BIS) prereleased the chapter of its 2025 Annual Economic Report on the next-generation monetary and financial system, examining tokenisation and stablecoins. The report expresses concern about the prospect of stablecoins being a mainstay of the monetary system given poor performance against the integrity, singleness and elasticity tests. Whether the regulatory frameworks in the EU and UK will be able to address these concerns remains to be seen.
DEVELOPMENT WHAT IS NEW AND WHAT COMES NEXT? EBA/ESMA joint report on recent developments in cryptoassets published 13 January 2025 As required under Article 142 of MiCA, the European Banking Authority (EBA) and European Securities and Markets Authority (ESMA) published their joint report on recent developments in cryptoassets
The report highlighted the growth of cryptoasset lending, borrowing and staking services in the EU and flagged the continued risk of money laundering/terrorist financing in the decentralised finance space.
The European Commission’s report to the European Parliament and the EU Council on developments in cryptoassets, which this report contributes to, has not yet been published. ESMA guidelines on reverse solicitation under MiCA published 26 February 2025 On 26 February 2025, ESMA published guidelines on situations in which a third-country firm is deemed to solicit clients established or situated in the EU and the supervision practices to detect and prevent circumvention of the reverse solicitation exemption under MiCA.
The guidelines: Aim to create greater convergence in the interpretation of, and supervisory approaches to, the situations in which a third-country firm is deemed to solicit clients established or situated in the EU. Are intended to promote supervision practices to detect and prevent the circumvention of MiCA.
ESMA guidelines on the conditions and criteria for the qualification of cryptoassets as financial instruments published 19 March 2025 ESMA published guidelines on the conditions and criteria for the qualification of cryptoassets as financial instruments on 19 March 2025.
The guidelines: Specify conditions and criteria for determining whether a cryptoasset should qualify as a financial instrument, and thereby be subject to the MiFID II regulatory framework. Provide clarifications on certain features of utility tokens, NFTs and hybrid tokens.
ESMA guidelines on supervisory practices for EU regulators to prevent and detect market abuse under MiCA published 29 April 2025 ESMA published guidelines on supervisory practices to prevent and detect market abuse under MiCA on 29 April 2025, aiming to ensure harmonised application of MiCA supervisory standards.
The guidelines are structured around the principles of proportionality, promote a risk-based approach and feature adaptations for crypto sector specificities. Adoption of new regulation on the requirements for applications to be authorised to offer asset-referenced tokens 5 June 2025 On 5 June 2025, the European Commission adopted a Delegated Regulation for the regulatory technical standards specifying the information in an application for authorisation to offer asset-referenced tokens (ARTs) to the public or to seek their admission to trading.
The delegated regulation sets out requirements for: Identification details of the applicant; Programme of operations, including the main features of the intended issuance; Internal governance arrangements and structural organisation; Liquidity management, reserve of assets and redemptions rights; and Suitability of the members of the management body.
The regulation will enter into force on the 20th day following its publication in the Official Journal of the EU. EBA no-action letter on the relationship between authorisation under PSD2 and MiCA published 10 June 2025 The EBA published a no-action letter on 10 June 2025 on the relationship between the Revised Payment Services Directive (PSD2) regime and MiCA for cryptoasset service providers (CASPs) that transact in electronic money tokens (EMTs).
The letter advises the national competent authority to enforce authorisation under PSD2 for CASPs that transact in EMTs after the transition period ending 2 March 2026, and from that point onward to apply a streamlined process to take advantage of the information provided during the CASP authorisation procedure.
The EBA advises the European Commission, EU Council and European Parliament to ensure in the long term that EU law avoids a dual authorisation requirement under both the PSD2 regime and MiCA for transacting in EMTs.
We will continue to monitor these trends and developments through the remainder of 2025, including how they interrelate with the rapid pace of change in the digital assets sector in the US.
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Disclaimer
This article is intended for general information purposes only and does not constitute legal advice. For advice specific to your situation, please contact our team at T & M Legis for a consultation with our Legal Experts.
