Global Digital Assets Digest January 2025

Welcome to this month's Global Digital Assets Digest. In the U.K, there's important clarification on the treatment of staking, important 

In the EU, the application date for MiCA came and went with a deluge of policy documents. The EBA also published an important consultation paper on the prudential treatment of exposures to cryptoassets. The ESAs have also published an important report on recent developments in cryptoassets,

In the UK, the FCA has published the first discussion paper on cryptoassets regulatory regime following its Cryptomap.

In the US, there's more news of  leadership changes at regulators, as well as important proposals from the CFPB.  

Updates and Guidance: International Bodies

1. MICA: EBA and ESMA issue Joint report on recent developments in cryptoassets

2. BIS: Update to Innovation Hub webpage

3. IMF: Publication: Kenya: Technical Assistance Report - Crypto regulation and legislation

4. EBA: Consultation: Draft Regulatory Technical Standards on the calculation and aggregation of crypto exposure values under CRR III

5. CPMI: Further steps to promote ISO 20022 harmonisation for enhanced cross-border payments

6. AIMA: Research into access to banking for crypto industry

7. MICA: Commission Delegated Acts on assessing proposed acquisitions of qualifying holdings in ARTs issuers and CASPs under MiCA

8. EBA: Final report on guidelines on reporting templates under MiCA

9. MiCA: Batch of final policy documents released

10. MiCA: Commission Delegated Regulation on sustainability indicators

11. MICA: ESMAStatement on MiCA transitional measures

12. MICA: Commission Delegated Regulation on classifying cryptoasset white papers and ensuring data is machine-readable

13. MICA: Commission Delegated Regulation on governance arrangements on the remuneration policy of issuers of significant asset-referenced or e-money tokens

14. MICA: Commission Delegated Regulation on procedure and timeframe for an issuer of asset-referenced tokens or of e-money tokens to adjust the amount of its own funds

15. MICA: Commission Delegated Regulation on adjustment of own funds requirement and minimum features of stress testing programmes

16. EBA: Report on tokenised deposits

17. FSB: Recommendations related to data flows and regulation and supervision of cross-border payments

18. FSB: News on Taskforce on Legal, Regulatory and Supervisory matters

Updates and Guidance: UK

19. BoE: Progress update and design note on the digital pound

20. The Financial Services and Markets Act 2000 (Collective Investment Schemes) (Amendment) Order 2025 (SI 2025/17)

21. The Financial Services and Markets Act 2023 (Addition of Relevant Enactments) Regulations 2024 (SI 2024/1347)

22. FCA: Consultation paper: Private Intermittent Securities and Capital Exchange System: Sandbox Arrangements (CP24/29)

23. FCA: Discussion paper: Regulating cryptoassets: Admissions & Disclosures and Market Abuse Regime for Cryptoassets (DP24/4)

24. BoE: Speech by Victoria Cleland, Executive Director, Payments: Payment cycles: An update on the Future Roadmap for the RTGS service

25. BoE: Announcement on activity in "Gate 1" in the DSS

26. PRA: Data collection on firms’ exposures to tokenised assets, stablecoins and other cryptoassets

Updates and Guidance: Europe

No new entries

Updates and Guidance: APAC

27. HKMA: Launch of Supervisory Incubator to encourage responsible adoption of DLT

28. SFC: Circular to VATPs on licensing process and revamped Second-phase assessment

29. HKEX: Launch of Integrated Fund Platform30. Hong Kong Government: Announcement on implementing Cryptoasset Reporting Framework

30. Hong Kong Government: Announcement on implementing Cryptoasset Reporting Framework

Updates and Guidance: Australia

No new entries

Updates and Guidance: North America

31. CFPB Seeks Input on Consumer Protections

32. House Financial Services Committee: Announcements on key appointments

33. CFCT: Chairman Rostin Behnam announces Departure from CFTC

34. FDIC Charting a New Course: Preliminary Thoughts on FDIC Policy Issues

Updates and Guidance: Middle East

No new entries 

Press/Articles

No new entries

Updates and Guidance: International Bodies

1. MICA: EBA and ESMA issue Joint report on recent developments in cryptoassets

On 16 January 2025, the EBA and ESMA published a joint report on recent developments in cryptoassets under MiCA. The report has been produced to assist the European Commission in fulfilling its requirement under MiCA to submit a report. Th report looks at the DeFi market and the main DeFi protocols. It assesses the development of DeFi in the EU, reviewing the number of DeFi users, the most popular DeFi protocols and decentralised applications.  The report then looks at the main categories of business models of crypto lending, borrowing and staking activities.

Key findings

• DeFi is still niche phenomenon, with EU adoption of DeFi, while above global average, is behind other developed economies (e.g. the US, South Korea).
• Crypto lending, borrowing and staking services are offered by a number of CASPs in EU jurisdictions. There appears to be limited engagement of EU consumers and financial institutions with crypto lending, borrowing and staking services.

2. BIS: Update to Innovation Hub webpage

On 14 January 2025, BIS updated its Innovation Hub webpage. This provides an overview of project portfolio and confirms 26 active projects at the start of 2025, and 31 projects completed since its establishment in 2019. BIS confirms that its work programme will seek to enhance horizon scanning activities to track new technological developments and identify gaps. BIS also plans to carry out further work on projects such as Project Agora under which BIS and other stakeholders will look at how tokenisation can enhance wholesale cross-border payments.

3. IMF: Publication: Kenya: Technical Assistance Report - Crypto regulation and legislation

On 9 January 2025, the IMF published a technical assistance report on the regulation of crypto assets in Kenya. The report, prepared following a request from Kenya's Capital Markets Authority (CMA), seeks to support the CMA on prudential and conduct aspects of the future cryptoassets regulatory framework for crypto assets. 

The report contains a legislative review of cryptoasset frameworks, noting a lack of specific rules on cryptoassets in parent laws in Kenya. The report notes some uncertainty and a lack of consensus among authorities on the nature of the Kenyan cryptoassets market, which the report considers hinders efforts to create an effective policy response.

Key recommendations

• Initiate a comprehensive empirical market analysis on the current state of the Kenyan cryptoasset market and comprehensive assessment of the associated risks. 
• Undertake a risk-based review of crypto assets currently traded/used in the Kenyan market to ascertain whether the existing regulatory framework provides adequate cover.
• Ensure that there are adequate technical and human resources to enable effective supervision of cryptoasset activities. There should be regular training of supervisory staff. 

4. EBA: Consultation: Draft Regulatory Technical Standards on the calculation and aggregation of crypto exposure values under CRR III 

On 8 January 2025, the EBA published a consultation paper on draft RTS on the calculation and aggregation of crypto exposure values under CRR III.

CRR III includes a transitional prudential treatment for cryptoassets, requiring the EBA to prepare RTS on the calculation of own funds requirements (including calculating the value of the exposures and how to aggregate short and long exposures). The EBA is also expected to  consider relevant internationally agreed prudential standards (e.g. the BCBS standard on prudential treatment of cryptoasset exposures). The mandate given to the EBA also covers ARTs referencing one or more traditional asset(s) and "other cryptoassets".

The RTS will determine the exposure value for transactions giving rise to counterparty credit risk within the credit risk framework and how to calculate the risk weighted exposure amount for market risk and/or credit valuation adjustment risk when institutions calculate the own funds requirements for exposures to crypto-assets. The RTS also contain further information on exposure calculation for derivatives or SFTs’ referencing cryptassets.
The deadline for comments is 4 April 2025. Following feedback, ESMA will finalise the RTS and send them to the European Commission for adoption.

For more information on the EU capital requirements regime and cryptoassets, please see our briefing here.

5. CPMI: Further steps to promote ISO 20022 harmonisation for enhanced cross-border payments 

On 7 January 2025, the CPMI issued a press release on its efforts to encourage adoption of its harmonised ISO 20022 data requirements on cross-border payments. These were published in October 2023 (see Global Digital Assets Digest November 2023 edition), and the CPMI considers adoption will help to make cross border payments safe and efficient.

Key points

• The CPMI will adopt steps for governance and maintenance of its harmonised ISO 20022 data requirements for enhancing cross-border payments.
• A panel of global ISO 20022 market practice groups will be set up in early 2025 to assist the regular maintenance of the data requirements.
• The CPMI will continue to engage with stakeholders in payments industry to encourage implementation of the harmonised data requirements by end-2027.

6. AIMA: Research into access to banking for crypto industry

On 20 December 2024, AIMA published research on crypto-focused hedge fund managers' access to banking services. AIMA calls for a collaborative approach to address issues identified in its research. 

7. MICA: Commission Delegated Acts on assessing proposed acquisitions of qualifying holdings in ARTs issuers and CASPs under MiCA

On 18 December 2024, the European Commission published Delegated Regulations under MiCA.

• Qualifying holdings in issuers of ARTs. The Delegated Regulation sets  out information  a proposed acquirer of a qualifying holding in an issuer of an ART is to submit to the competent authority for the prudential assessment of the proposed acquisition. Areas covered include: information relating to the financing of the proposed acquisition; and information on the new proposed group structure and its impact on supervision.
• Qualifying holdings in CASPs. The Delegated Regulation sets out information a proposed acquirer of a qualifying holding in CASP is to submit to the competent authority for the prudential assessment of the proposed acquisition. Article 84 of MiCA sets out the criteria against which the NCA should evaluate the suitability of the proposed acquirer.

Final reports were published in respect of the RTS in ESMA in March 2024 and May 2024 respectively.

8. EBA: Final report on guidelines on reporting templates under MiCA

On 18 December 2024, the EBA published its final report on guidelines on templates to assist NCA's supervisory duties regarding issuers' compliance with MiCA. The guidelines specify common templates to cover identified reporting data gaps. These templates include information on number of holders, market capitalisation and composition of reserve of assets. The Guidelines also include common templates and instructions that issuers should use to collect data from relevant CASPs.

9. MiCA: Batch of final policy documents released

On 17 December 2024, ESMA published a press release announcing the release of the last policy documents under MiCA ahead of the entry into application of MiCA

• Final Report on the guidelines on qualification of cryptoassets as financial instruments. These guidelines set out the conditions and criteria for determining whether a cryptoasset should be deemed a financial instrument (therefore ensuring the consistent application of the provisions in Article 2(4)(a) of MiCA). The guidelines clarify the delineation between MiCA and MiFID, as well as provide clarifications on certain features of utility tokens, NFTs and hybrid tokens.
• Final report on RTS on the detection and prevention of market abuse. This follows a March 2024 consultation paper and contains RTS on the detection and prevention of market abuse. Under MiCA, persons professionally arranging or executing transactions (PPAETs) in cryptoassets are expected to have effective arrangements, systems and procedures in place to prevent and detect market abuse. PPAETs must also report any reasonable suspicion regarding an order or transaction where there are indications of market abuse. Article 92 of MiCA extends the obligation to report as a STOR “other aspects of the functioning of the distributed ledger technology such as the consensus mechanism". ESMA considers PPAETs to include CASPs operating a trading platform; CASPs providing services related to cryptoassets (such as reception or transmission and persons dealing on own account in cryptoassets on a professional basis or as part of their business activity). ESMA’s view is that miners, validators, searchers, and builders should not be considered as PPAETs.  Article 16 of MAR and Commission Delegated Regulation (EU) 2016/957 is used as a basis for effective arrangements, systems and procedures to prevent and detect market abuse.
• Final report on guidelines specifying standards on the maintenance of systems and security access protocols. These guidelines relate to the MICA provision requiring offerors and persons seeking admission to trading of cryptoassets (other than ARTs and EMTs) to have effective administrative arrangements to ensure that their systems and security protocols meet EU standards. ESMA interprets "administrative arrangements" as processes to assign roles and access rights, as well details on granting and revoking access.
• Final Report on the Guidelines specifying certain requirements on investor protection. The final report contains two sets of guidelines: guidelines on certain aspects of the suitability requirements and format of the periodic statement for portfolio management activities under MiCA; and guidelines on the procedures and policies in the context of transfer services for cryptoassets. They relate to the requirement under article 81 of MiCA for CASPs providing advice on cryptoassets or portfolio management of cryptoassets to provide suitable recommendations to their clients/make suitable investment decisions on behalf of their clients. ESMA has used the MiFID II guidelines on suitability requirements as a basis for the guidelines.
• Final Report on the guidelines on reverse solicitation under MICA. The final report covers: guidelines on the supervision practices to detect and prevent the circumvention of the reverse solicitation exemption; and guidelines on the solicitation of clients by third-country firms. The guidelines provide that the reverse solicitation exemption should be construed narrowly, be viewed as the exception, and not be used to circumvent MiCA requirements.

The Guidelines will be translated into the official EU languages and published on the ESMA website. They will usually apply from three months after the publication of the translations. The draft RTS is submitted to the European Commission for adoption. 

10. MiCA: Commission Delegated Regulation on sustainability indicators

On 17 December 2024, the European Commission published a Delegated Regulation on sustainability information. The consensus mechanism underpinning many cryptoasset transactions requires the use of materials and computing power impacting the climate and environment. MiCA requires the disclosure in relevant white papers of the principal adverse impacts on the on the climate of the consensus mechanisms used to issue a cryptoasset. CASPs are also required to publish similar information on their website. The RTS set out a list of indicators to help investors access accurate, fair, clear, not misleading and comparable information.

11. ESMA: Statement on MiCA transitional measures  

On 17 December 2024, ESMA issued a statement on transitional measures in respect of CASPs offering cryptoasset services in the EU prior to 30 December 2024. ESMA describes the transitional period set out in Article 143(3) of MiCA as "inherently non unified", adding that CASPs will be subjected to varying transitional periods depending on the Member State(s) that they are active in. ESMA has also published a document setting out the various grandfathering periods for Member States.

CASPs providing services in more than one Member State are advised to take this into account and to make the necessary preparations to avoid disruption. This includes early engagement with relevant national competent authorities about authorisation plans.

12. MICA: Commission Delegated Regulation on classifying cryptoasset white papers and ensuring data is machine-readable

On 16 December 2024, the European Commission published a Delegated Regulation on classifying cryptoasset white papers and ensuring data is machine-readable.

MICA provides for the creation of a register of cryptoasset white papers. It also requires regulatory technical standards setting out the data needed to classify, by type of crypto-asset, cryptoasset white papers (including the legal entity identifiers of the issuer and cryptoasset service provider) in the register. The RTS also specify practical arrangements to ensure the data is machine-readable, so as to encourage access to white papers. The RTS provide further information on the use of LEIs by persons drawing up white papers, as well as on the use of the ISO 24165 Digital Token Identifier (DTI).

13. MICA: Commission Delegated Regulation on governance arrangements on the remuneration policy of issuers of significant asset-referenced or e-money tokens 

On 16 December 2024, the European Commission adopted a Delegated Regulation under MICA on  governance arrangements for a remuneration policy promoting sound and effective risk management. The RTS provide that remuneration policies should be performance-related, align with the risks of the issuers and provide incentives for long term-oriented risk-taking behaviour in line, with the issuer’s risk appetite  The RTS also provide that remuneration policies are consistent with ESG risk-related objectives and take into account ESG risks and their possible adverse impacts. 

14. MICA: Commission Delegated Regulation on procedure and timeframe for an issuer of asset-referenced tokens or of e-money tokens to adjust the amount of its own funds

On 16 December 2024, the European Commission published a Delegated Regulation on the procedure and timeframe for an issuer of ARTs/EMTs to adjust the amount of its own funds. The RTS set out the procedure to be followed by the competent authority and the issuer of significant ARTs/EMTs, as well as issuers of non-significant tokens requested by the competent authority pursuant to Article 45(5) of MiCA.  The RTS set out the process to notify the relevant issuer of the timeframe to increase own funds and for the relevant issuer to submit a detailed plan on how the own funds will be adjusted to meet the requirement in Article 45(5) of MiCA.. The RTS also set out the maximum timeframe for the relevant issuer to implement the plan to increase its own funds.

15. MICA: Commission Delegated Regulation on adjustment of own funds requirement and minimum features of stress testing programmes 

On 13 December 2024, the European Commission published a Delegated Regulation containing RTS on the procedure and timeframe to be followed by the competent authority and ART issuers/EMT issuers where higher own funds requirements need to be adjusted following an assessment of the competent authority of a higher degree of risk. The draft RTS set out how the competent authority will produce the assessment of higher degree of risk and also provide for the relevant issuer to submit a plan to adjust its own funds. The draft RTS also include: the (maximum) timeframes to implement the plan to increase own funds; and specific minimum requirements in respect of the design of stress testing programmes (e.g. provisions on internal governance arrangements and relevant data infrastructure).

16. EBA: Report on tokenised deposits

On 12 December 2024, the EBA published a report on tokenised deposits. This follows a survey of competent authorities and desk-based research analysing tokenisation of deposits by credit institutions.. Areas covered by the report include: tokenised deposit cases identified in the market to-date (2 projects cited in the EEA); potential benefits; and challenges in the deployment of tokenised deposits. The report notes a growing interest from credit institutions to deploy deposits on the DLT.

The report finds no immediate need for amending the regulatory and supervisory framework but suggests a convergent approach to cryptoasset classification. It sets out indicative characteristics that may be used to distinguish tokenised deposits from e-money tokens issued under MiCA. The EBA encourages competent authorities to undertake regular market monitoring and knowledge exchange concerning projects to tokenise deposits in their jurisdiction. 

17. FSB: Recommendations related to data flows and regulation and supervision of cross-border payments 

On 12 December 2024, the FSB issued two reports containing finalised recommendations on promoting greater alignment in data frameworks related to cross-border payments; and consistency in the regulation and supervision of bank and non-bank payment service providers. Both reports follow consultation papers issued in July 2024. The FSB also published overviews of the responses to the consultation papers. The recommendations promote key actions from the G20 Roadmap to address legal, supervisory, and regulatory issues in cross-border payments.

Final report on recommendations for regulating and supervising bank and non-bank payment service providers offering cross-border payment services

The report notes an absence of comprehensive international standards applicable to non-bank PSPs’ provision of cross-border payment services. The FSB considers that inconsistencies in the legal, regulatory, or supervisory regimes applied to banks and non-banks providing cross-border payment services can impede progress on cross-border payments. Areas covered by the recommendations include: evaluating the effectiveness of existing laws, regulations, and supervisory frameworks in addressing risks across the PSP sector; supervisory expectations promoting the safe and efficient provision of cross-border payment services; and the role of licensing or registration requirements.

Final report on recommendations to promote alignment and interoperability across data frameworks related to cross-border payments

The transfer of data is considered essential to the functioning of the cross-border payments system. The recommendations seek to promote alignment and interoperability across data frameworks (laws, rules, and regulatory requirements for collecting, storing and managing data). The recommendations follow a stock take undertaken by the FSB of national and regional data frameworks relevant to the functioning, regulation and supervision of cross-border payments. This identified a number of frictions across data frameworks hindering cross-border payments. 

Areas covered by the recommendations include the following: addressing uncertainty concerning balancing regulatory and supervisory obligations; promoting the alignment and interoperability of regulatory and data requirements related to cross-border payments; mitigating restrictions on the flow of data related to payments across borders; and reducing barriers to innovation. The FSB plans to set up a Forum on Cross-Border Payments Data to ensure that the recommendations are taken forward.

18. FSB: News on Taskforce on Legal, Regulatory and Supervisory matters

On 12 December 2024, FSB confirmed that it was inviting cross-border payments market stakeholders to join its Taskforce on Legal, Regulatory and Supervisory matters. The LRS Taskforce was established in 2023 to provide means of engagement for regular engagement between the public and private sectors. As the policy development stage has now completed, the LRS Taskforce will now focus on policy implementation and looking at various legal and regulatory barriers to achieving the goals of the G20 Roadmap on Cross Border Payments.

Updates and Guidance: UK

19. BoE: Progress update and design note on the digital pound

On 14 January 2025, the BoE published a progress report in respect of the digital pound. This summarises work carried out in the past year in light of the regulators entering the design phase in respect of the digital pound. This stage involves a more detailed policy and technology framework for a potential digital pound, based on the model outlined in the 2022  consultation paper (although no decision has been made on proceeding with the digital pound). The progress update also summarises how digital pound work relates to the National Payments Vision (see briefing here). - link missing 

The BoE states that design notes will be issued to set out initial thinking on specific aspects of the digital pound. The BoE will also be launching a technology sandbox in 2025, the Digital Pound Lab, allowing for experimentation on: API functionality; innovative use cases; and potential business models for PIPs and ESIPs.

The BoE's design note contains a blueprint framework for the digital pound, outlining the aim, scope and focus areas of the digital pound blueprint. Work is organised around four aspects: product vision and strategy (e.g. how the digital pound could meets policy goals); scheme and regulation (including terms and standards for the use and operation of a digital pound); and technology; and operations. 

For more on the digital pound, please see our briefing here.

Comment: No decision has yet been made on whether to proceed with a digital pound. A digital pound would require Parliament approval and primary legislation.

20. The Financial Services and Markets Act 2000 (Collective Investment Schemes) (Amendment) Order 2025 (SI 2025/17)

The Financial Services and Markets Act 2000 (Collective Investment Schemes) (Amendment) Order 2025 has been published. This clarifies that arrangements for qualifying cryptoasset staking do not amount to a collective investment scheme. This is intended to confirm to firms that they may offer staking services to UK customers without coming under CIS rules.

The SI adds "qualifying cryptoasset staking" to Schedule to the CIS Order (which sets out the arrangements not amounting to a CIS). "Qualifying cryptoasset staking” is defined as the use of a qualifying cryptoasset in blockchain validation. “Blockchain validation” means the validation of transactions on a blockchain or a network using DLT or other similar technology.

The Order comes into force on 31 January 2025.

Comment: The features of staking have lead to some ambiguity in relation to the regulatory perimeter/applicable regulatory requirements. This provides some clarity/reassurance for those engaging in staking services. Further guidance in this area is expected from the regulators.

21. The Financial Services and Markets Act 2023 (Addition of Relevant Enactments) Regulations 2024 (SI 2024/1347) 

On 17 December 2024, the Financial Services and Markets Act 2023 (Addition of Relevant Enactments) Regulations 2024 (SI 2025/1347) were published.

Section 17(3) of FSMA 2023 (see our briefing here) sets out pieces of legislation that can be amended for the purposes of DSS regime. The SI brings into force several pieces of legislation into scope of section 17(3) of FSMA 2023, with the effect that they can be modified when establishing FMI sandboxes:

• the Stock Transfer (Gilt-edged Securities) (CGO Service) Regulations 1985 (STRs); 
• the Government Stock Regulations 2004 (GSRs);
• the Money Laundering Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017; and
• UK Prospectus Regulation.

The changes will provide temporary exemption from the cryptoasset regime in the MLRs for firms engaging in the DSS. Bringing the STRs and the GSRs into scope is designed to aid sovereign debt issuances utilising DLT under the DSS.

The SI also brings into scope legislation to enable the creation of the “Private Intermittent Securities and Capital Exchange System” (PISCES) Sandbox.

22. FCA: Consultation paper: Private Intermittent Securities and Capital Exchange System: Sandbox Arrangements (CP24/29) 

On 17 December 2024, the FCA issued a consultation paper (CP24/29) on a regulatory framework in respect of the Private Intermittent Securities and Capital Exchange System (PISCES). PISCES is new type of trading platform enabling intermittent trading of private company shares using market infrastructure.

The consultation paper follows HMT's response to its consultation on PISCES, as well as the publication of draft secondary legislation in respect of PISCES. The response confirmed certain features of the regulatory framework for PISCES such as: PISCES will operate as a secondary market; PISCES platforms will not be treated as trading venues under UK MiFIR; only certain types of institutional investors and limited subset of retail investors will be able to buy shares on PISCES; PISCES will not involve a public style market abuse regime; and there will not be a transaction reporting regime.

Secondary legislation gives the FCA powers to make rules to implement and operate the PISCES sandbox arrangements. The FCA is consulting on a standalone sourcebook for the PISCES sandbox containing new rules and guidance (draft PISCES Sourcebook). The FCA sets out a proposed disclosure regime with various provisions (e.g. risk warnings for investors about the risks specific to PISCES; a bespoke trade transparency regime; and rules and guidance on oversight of manipulative trading practices).

The deadline for comments on CP24/29 is 17 February 2025. The FCA will publish final rules after HMT has laid its final SI before Parliament (expected by May 2025). The FCA plans to publish further details in early 2025 about pre-application engagement opportunities for firms.

23. FCA: Discussion paper: Regulating cryptoassets: Admissions & Disclosures and Market Abuse Regime for Cryptoassets (DP24/4)

On 16 December 2024, the FCA published a discussion paper (DP24/4) in respect of admissions and disclosures (A&D) and the market abuse regime for cryptoassets. This follows the publication of the FCA's  cryptomap setting out details on planned consultation papers (see our briefing here).

Admissions and disclosures (A&D)

HMT is expected to publish legislation in relation to A&D that will prohibit the making of a public offer in respect of cryptoassets (unless an exemption applies). An exemption is expected to cover: offers of cryptoassets admitted or to be admitted to trading on a Cryptoasset Trading Platform (CATP); cryptoasset offers qualifying for other exemptions and offered off-platform (e.g., offers made only to qualified investors). 

Under the proposed regime, the person initiating the application for admission to trading would be responsible and liable for required admission documents (including where this is the CATP ).

The regime forsees a "necessary information test" for the admission document, requiring a document preparer to include minimum disclosures (e.g. features, prospects and risks of the cryptoassets; rights and obligations attached to the cryptoassets; and details underlying technology). The FCA is considering introducing more detailed disclosure requirements in its Handbook rules (e.g. the nature and scope of governance mechanisms that may affect the cryptoasset; and the legal status of the cryptoasset). CATPs would also have their own more detailed requirements for the content of admission documents.

Due diligence

Steps CATPs would be expected to carry out in this regard include:  due diligence to assess whether a cryptoasset should be admitted to trading and that associated disclosures are accurate and complete (due diligence would cover the cryptoasset’s underlying technology); due diligence on the persons involved with the offer; disclosure in admission documents of scope and key findings of due diligence (including verifying that any claims are substantiated)

The FCA is also considering requiring CATPs to have processes for rejecting admission to trading.

Market Abuse Regime for Cryptoassets (MARC)

HMT is expected to introduce new legislation related to MARC. The FCA also considers that HMT will bring the activity of operating a CATP within the scope of the RAO, and so enable the FCA to impose certain obligations on regulated CATPs in relation to market abuse (as well as to engage with cross-platform information sharing mechanisms). The FCA proposes a principles-based market abuse regime covering:  offences/prohibitions (i.e. prohibitions on insider dealing, unlawful disclosure of inside information, and market manipulation); requirements for disclosure of inside information; safe harbours and exceptions for legitimate behaviours; requirements on prevention, detection, and disruption of market abuse; and market abuse related systems and controls.

Challenges associated with the disclosure of inside information regime for cryptoassets cited in DP24/4 include: absence, in some cases of, an easily identifiable "issuer" (e.g., Bitcoin) to attribute disclosure responsibilities; and the nature of inside information relating to cryptoassets may differ from other financial instruments.

The FCA is proposing that issuers requesting admission to a CATP for their cryptoasset will be responsible for publicly disclosing relevant inside information.

The deadline for comments is 14 March 2025.

Comment: Regulated firms/market infrastructure conducting cryptoassets services should monitor progress and consider any potential costs/changes to business models that may rise as a result of the proposals.

24. BoE: Speech by Victoria Cleland, Executive Director, Payments: Payment cycles: An update on the Future Roadmap for the RTGS service 

On 16 December 2024, the BoE published a speech by Victoria Cleland, Executive Director, Payments titled "Payment cycles on the Future Roadmap for the RTGS service". This follows the publication in July 2024 of a discussion paper on innovation in money and payments. The speech sets out progress made by the BoE in: reviewing whether wider access to RTGS can be facilitated; the case for extending RTGS settlement hours; and encouraging wholesale innovation through synchronisation.

Key issues

• The BoE welcomes the initiative from the Payments Interoperability and Extension Task Force to collect industry views on improving cross-border payments. Collaboration with industry and stakeholders is at the centre of BoE's approach to the future roadmap for the RTGS.
• The BoE aims to respond  by Spring 2025 to its February 2024 discussion paper on facilitating access to RTGS by non-bank PSPs, FMIs and foreign banks, as well as to the review of the CHAPS direct participation threshold.
• The BoE has been carrying out explorative work in relation to synchronisation (coordination of the movement of central bank money between accounts in the RTGS service) and has been engaging with synchronisation operators.
• Further work will be carried out on additional functionality of wholesale CBDC and could involve testing different transactions under a synchronisation functionality and tokenised wCBDC.
• The BoE supports a phased transition to extended hours of the RTGS over several years,  with a first-stage extension of four and a half hours into the morning

25. BoE: Announcement on activity in "Gate 1" in the DSS

In December 2024, the BoE announced the first two entities to be approved at Gate 1 (the testing stage) in the DSS. The DSS to aim to test if any changes need to be made to UK settlement legislation to accommodate DLT. The approach for the regime set out in Policy Statement (PS24/12) is a series of gates for sandbox entrants to move through (the permitted activity is to increase with each stage) as relevant standards are met. In September 2024,  the Bank and FCA published a number of documents alongside opening the DSS for applications:

26. PRA: Data collection on firms’ exposures to tokenised assets, stablecoins and other cryptoassets 

On 12 December 2024, the PRA announced a data collection exercise in respect of firms' exposures to tokenised assets, stablecoins and other cryptoassets. The exercise is designed to inform PRA and BoE work on cryptoassets. It will assist the regulators in assessing costs and benefits of different policy options, as well as to monitor the financial stability implications of firms' relevant exposures.

Updates and Guidance: Europe

No new entries.

Updates and Guidance: APAC

27. HKMA: Launch of Supervisory Incubator to encourage responsible adoption of DLT

On 8 January 2025, the HKMA launched the Supervisory Incubator for Distributed Ledger Technology (the Incubator) to help banks responsibly unlock the transformative potential of DLT as a one-stop supervisory platform.  This new supervisory arrangement is designed to help banks maximise the potential benefits of DLT adoption by effectively managing the associated risks, which includes augmenting risk management capabilities at both the individual bank and industry levels.  Tokenised deposits will be a core focus upon the Incubator's inception. 

28. SFC: Circular to VATPs on licensing process and revamped Second-phase assessment 

On 18 December 2024, the SFC issued a circular outlining a clear roadmap for the licensing process of virtual asset trading platform (VATP) and providing additional guidance on the second-phase assessment.  This revamped second-phase assessment will involve a tripartite agreement among the SFC, the VATP and the external assessor, with the SFC becoming a party to the engagement and actively engaging with the VATPs.  The second-phase assessment will also be enhanced to ensure that VATP’s policies, procedures, systems and controls are suitably designed and implemented by the VATP, and it will be performed as a direct assurance engagement.  

In terms of licensing procedures, deemed VATP applicants may receive conditional licenses with restrictions.  These restrictions require the VATP to complete rectifications and perform penetration test and vulnerability assessments with satisfactory results.  Upon completion of the second-phase assessment, the SFC may lift the relevant licensing conditions. 

29. HKEX: Launch of  Integrated Fund Platform

On 13 December 2024, the Hong Kong Exchanges and Clearing Limited launched a fund repository on its Integrated Fund Platform (IFP), marking a significant step forward in enhancing transparency of fund information for the SFC authorised funds in Hong Kong.  This new financial infrastructure will provide investors with a one-stop access to information on retail funds.  The IFP is part of an initiative to foster co-development of fintech and the real economy in Hong Kong by facilitating the development of an efficient, diverse and vibrant fund distribution ecosystem. 

30. Hong Kong Government: Announcement on implementing Cryptoasset Reporting Framework

On 13 December 2024, the Hong Kong Government announced their commitment to implementing the Cryptoasset Reporting Framework for enhancing international tax transparency and combating cross-border tax evasion in light of the rapid growth of the crypto-asset market.  

Updates and Guidance: Australia

No new entries.

Updates and Guidance: North America

31. CFPB Seeks Input on Consumer Protections

On 19 January 2025, the CFPB published for comment a proposed interpretive rule outlining the application of the Electronic Fund Transfer Act and implementing regulation (Regulation E) to new types of digital payment mechanisms, such as stablecoins and other digital currencies. This follows research from CFPB (see Global Digital Assets Digest September 2024 edition) and work by the US Treasury on existing legal framework and stablecoins.

EFTA provides gives rights to consumers to dispute errors and limit their liability for unauthorised electronic fund transfers among other things. 
The proposed rule would involve interpreting "funds" in Regulation E to include "assets that act or are used like money, in the sense that they are accepted as a medium of exchange, a measure of value, or a means of payment". The term “funds” would therefore include stablecoins.

The deadline for comments is 31 March 2025.

32. House Financial Services Committee: Announcements on key appointments

On 9 January 2025, House Financial Services Committee Chairman French Hill announced a number of key appointments: the House Financial Services Committee’s Vice Chairman; Subcommittees Chairs; Vice Chair for Communications; and Committee Whip for the 119th Congress. Hill states that the new leadership team will drive the policy agenda and establish an appropriate regulatory framework for digital assets.

33. CFTC: Chairman Rostin Behnam announces Departure from CFTC

On 7 January 2025, the CFTC announced that Chairman Rostin Behnam would be stepping down from his position as Chairman on 20 January 2025. The CFTC also published a keynote address by Behman, setting key points in his tenure, including in relation to the regulation of cryptoassets. The speech calls for comprehensive regulatory guardrails and cites how innovation in financial markets has brought certain issues to discussion (conflicts of interest, the strength of capital, margin, and segregation requirements).

34. FDIC Charting a New Course: Preliminary Thoughts on FDIC Policy Issues

On 10 January 2025, the FDIC published remarks by Vice Chairman Travis Hill on emerging FDIC policy in light of leadership changes. The speech looks at supervision, exploring in particular the 2023 regional bank failures and lessons learnt. The speech also included a section on innovation  and technology, with notable points as follows:

• the innovation lab, FDiTech, established by Chairman McWilliams to look at challenges faced by banks in relation to technology adoption, could be relaunched in the future;
• the FDIC should consider publishing additional guidance on topics, such as fintech partnerships, and digital assets and tokenisation;
• the FDIC need a reset to its approach to digital assets and tokenisation (the interagency approach foreseen in the 2021 roadmap published by the banking agencies was not followed up) and to address wrongly held perceptions about its attitude towards innovation; and
• the issue of debanking is related to digital assets sector, with a notable number of account closures being observed.

Updates and Guidance: Middle East

No new entries.

Press/Articles

No new entries.

Contributors: Sasha Sawant; Anna He; and Anson Chan