Regulatory Shifts in Crypto in 2025

Explore how crypto regulation is shaping up in the US, EU, and Asia, covering stablecoins, exchanges, DeFi, and ETFs in the race for mature frameworks.

Introduction to Crypto Regulations

Once dominated by ambiguity, fragmentation, and enforcement-first approaches, the global regulatory landscape is now tilting towards clarity, coordination, and (at least in some regions) collaboration. 

As the cryptocurrency industry matures, governments and agencies are refining their mindsets and redefining their roles to be more accepting of blockchain and crypto technologies.

In this article, we distill how regulation is evolving across key jurisdictions, namely the United States, European Union, and Asia, and across pivotal sectors of the crypto ecosystem: stablecoins, exchanges, decentralised finance (DeFi), and the expanding world of crypto exchange-traded funds (ETFs).

Stablecoins: From Innovation to Institution

Once dogged by the stigma of USDT’s de-pegging incident, as well as Terra’s downfall in 2022, stablecoins have made leaps towards legitimacy under clearer regulatory contours.

United States

In 2025, the US Congress passed stablecoin-specific bills, including the STABLE and GENIUS Acts. US President Donald Trump has also issued the ‘Strengthening American Leadership in Digital Financial Technology’ Executive Order. 

These proposals aim to:

• Legally define ‘payment stablecoins’.
• Require 1:1 reserve backing.
• Impose transparency and audit requirements.
• Prioritise the development and growth of lawful, dollar-backed stablecoins.

The Office of the Comptroller of the Currency’s (OCC) March 2025 guidance further enabled national banks to hold deposits that serve as reserves for certain stablecoins, effectively opening the doors for traditional institutions to enter the space.

In May 2025, the US Senate’s stablecoin bill, dubbed the GENIUS Act, passed a crucial cloture vote, reviving its chances within days after a failed attempt. The legislation would create a legal framework for stablecoins, potentially unlocking a wave of Wall Street capital.

European Union

Under Markets in Crypto-Assets (MiCA), stablecoins are categorised as either e-money tokens (EMTs) or asset-referenced tokens (ARTs), each requiring stringent reserve backing and caps on transaction values. The EU now enforces regular audits and operational disclosures, creating an EU-wide framework that reduces friction for cross-border payments.

Asia

Singapore and Hong Kong are leading the pack in terms of stablecoin developments in Asia. Singapore has issued over 30 Major Payment Institution (MPI) licences tied to stablecoin operations. 

Hong Kong, meanwhile, is designing stablecoin-specific guidance in tandem with its broader Virtual Asset Service Provider (VASP) regime. Vietnam and Thailand are also advancing regulatory pilots to integrate stablecoins into domestic financial flows.

Stablecoins are evolving from grey-market infrastructure to central pillars of the digital finance stack, with regulators aiming to ensure accountability without stifling use cases.

Centralised Exchanges: Gatekeepers Under New Rules

Centralised exchanges (CEXs), seen as the main entry points to the crypto economy, are now adapting to more mature regulatory expectations, especially around licensing, custodianship, and Know Your Customer (KYC) and anti-money laundering (AML) compliance.

United States

Under new US Securities and Exchange Commission (SEC) Chair Paul Atkins, the Commission is working alongside Congress and the Commodity Futures Trading Commission (CFTC) to establish regulations for crypto exchanges in the US via the FIT21 Act. 

The OCC’s stance also supports bank-exchange partnership models, allowing firms to offer crypto custody directly.

European Union

MiCA has introduced passporting rights, meaning that, if a crypto asset service provider is authorised in one EU state, it can operate across all member nations. This reduces licensing complexity but raises the bar for compliance. 

The European Banking Authority (EBA) and European Securities and Markets Authority (ESMA) now jointly monitor operational resilience, market abuse, and user protection in licensed exchanges.

Asia

Hong Kong and Singapore have issued specific licences:

• Hong Kong: Over 10 approved Virtual Asset Trading Platform (VATP) licences.
• Singapore: Dozens of MPI and Digital Payment Token (DPT) licences granted under the Monetary Authority of Singapore’s (MAS) oversight.
• Vietnam, Thailand, and the Philippines: All are in various stages of refining their centralised exchange regimes, often with sandbox periods or hybrid licences.

Decentralised Finance (DeFi): Wrestling With the Unregulatable

Due to the decentralised nature of DeFi, it continues to pose one of the biggest regulatory puzzles.

United States

The Tornado Cash sanctions and decentralised autonomous organisation (DAO) accountability debates have initiated a push to apply existing financial laws to decentralised protocols. However, rather than blanket crackdowns, compromises have been made, with proposals for front-end registration, protocol-level disclosures, and verifiable KYC integrations. 

Trump and the SEC have pulled back aggressive actions against DeFi projects, instead favouring consultative rulemaking via its new Crypto Task Force. For example, Trump recently signed a resolution to nullify digital asset reporting requirements of DeFi brokers.

European Union

MiCA 2.0 discussions are underway and expected to include provisions for DeFi. For now, the EU treats most DeFi apps as unlicenced, unless they have a centralised governance component or fiat on/off-ramp. This is taking place against a backdrop of discussions around DAO identity, protocol audits, and user risk disclosure, which are gaining pace.

Asia

Jurisdictions like Singapore and Japan are tackling DeFi through regulatory sandboxes, while Hong Kong is studying DAO recognition models. There is a growing acceptance that regulating DeFi may not mean regulating the code, but rather the interfaces and infrastructure that connect it to the human world.

Cryptocurrency ETFs: Hurtling Towards Mainstream Financial Integration

Crypto ETFs have become the most visible frontier for crypto’s integration with traditional finance (TradFi) — and 2025 has brought remarkable progress.

United States

The SEC has received filings for ETFs beyond Bitcoin and Ethereum, including Solana (SOL), XRP, Litecoin (LTC), and even meme coins like DOGE and TRUMP. Analysts and polymarket bets have raised favourable odds for approval of major altcoins.

In addition, the SEC also received filings for staking-integrated ETFs — for example, US spot ETH ETFs and in-kind creation or redemption models — which allow for more efficient trading. These are still pending review of the SEC as of this writing.

The SEC requires spot Bitcoin and Ethereum ETFs to comply with strict custody, transparency (i.e., investor disclosures), and reporting standards (i.e., daily net asset value reporting).

ETFs are taxed like stocks, with gains reported on IRS Forms.

Global Perspective

Hong Kong has greenlit its first spot Bitcoin and Ethereum ETFs, boosting regional legitimacy. Europe is following suit more cautiously under the Markets in Financial Instruments Directive (MiFID) and Undertakings for Collective Investment in Transferable Securities (UCITS) frameworks.

• MiFID: The MiFID II update has improved the comprehensiveness of regulatory frameworks governing financial markets and investment services across the European Union. Any spot crypto ETF offered in Europe must comply with MiFID II’s strict transparency, reporting, and investor protection requirements.
• UCITS: This EU regulatory framework is designed to allow mutual funds to be sold and marketed across all EU member states under a single set of rules. A crypto ETF has to be UCITS-compliant before it is allowed to be released to retail investors: this means meeting strict requirements on diversification, liquidity, and investor disclosures.

Cross-Cutting Trends and Meta-Regulatory Themes

Global Convergence or Continued Fragmentation?

While many jurisdictions are aligning on core principles — consumer protection, AML/KYC, reserves transparency — regulatory fragmentation still exists. However, 2025 has seen renewed coordination via international bodies like the Financial Stability Board (FSB) and G20, aiming to reduce arbitrage and clarify cross-border standards.

Tech-Enabled Compliance

From on-chain KYC to Zero-Knowledge (ZK) proofs for AML standards, regulators are increasingly recognising technical solutions that preserve user privacy while enabling oversight.

Regulation as a Competitive Advantage

Countries like Singapore, the UAE, and now potentially the US are positioning crypto clarity as a draw for capital and talent. The idea of ‘regulatory arbitrage’ is being replaced by ‘regulatory magnetism’.

Conclusion: A Maturing Framework for a Maturing Asset Class

The crypto regulatory landscape in 2025 reflects an industry no longer defined by its ‘upstart’ nature, but by its institutional integration and legal architecture. The United States has repositioned itself under crypto-forward leadership, the EU has harmonised operations under MiCA, and Asia has emerged as a region with innovation-friendly frameworks.

Change is also afoot for certain corners of the cryptosphere. Stablecoins are increasingly accepted into payment infrastructures, exchanges are evolving into licenced on-ramps, DeFi is potentially entering the frame of regulated finance, and ETFs are giving traditional investors a gateway to crypto markets.

The first half of 2025 may be remembered as the year that crypto entered the realm of structured, state-recognised finance.

Due Diligence and Do Your Own Research

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Although the term ‘stablecoin’ is commonly used, there is no guarantee that the asset will maintain a stable value in relation to the value of the reference asset when traded on secondary markets or that the reserve of assets, if there is one, will be adequate to satisfy all redemptions.

Past performance is not a guarantee or predictor of future performance. The value of crypto assets can increase or decrease, and you could lose all or a substantial amount of your purchase price. When assessing a crypto asset, it’s essential for you to do your research and due diligence to make the best possible judgement, as any purchases shall be your sole responsibility.