Crypto View - December 2025

It’s been another whirlwind quarter in the world of crypto regulation—just when you think things might slow down for the holidays, the UK and global regulators have kept the pace up. Any suggestion that the UK regulator was not a fan of crypto can be discounted in light of their extreme festive generosity in publishing not one but three consultation papers, coming hot on the heels of HMT finally laying its cryptoasset regime before Parliament. In addition, the Bank of England and FCA are pushing ahead with new rules for stablecoins and tokenisation, and digital assets have now been formally recognised as property under UK law. Meanwhile, the EU is busy bedding in MiCA, Hong Kong is opening up new opportunities for virtual asset trading, and the UAE is rolling out fresh frameworks for stablecoins and staking.

Below, we break down the latest developments and what they could mean for crypto businesses and investors as we head into 2026.

UK government lays final legislation before Parliament for new cryptoasset regime

On 15 December 2025, HM Treasury published a near-final version of draft Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2025 (the Cryptoasset Regulations), and laid it before Parliament, to deliver a new financial services regulatory regime for cryptoassets in the UK. While the text includes substantial updates and more detail than the previous draft published in April, the overarching policy objectives remain consistent with previous proposals.

• Admissions and Disclosures Regime: There is now extensive new wording on the regime for admitting and disclosing crypto assets, drawing from the UK’s new securities prospectus rules. New crypto asset listings will only be permitted via UK-regulated trading platforms. The requirements appear demanding for new asset listings, but there is more clarity the separate consultation that came out on 16th December.
• Market Abuse Provisions: The draft introduces market abuse rules, including the concept of “legitimate cryptoasset market practice” – activities common in the crypto sector that might otherwise be seen as abusive. The Financial Conduct Authority (FCA) will define which practices qualify as legitimate, this gives the industry a crucial opportunity to ensure the list is sufficiently comprehensive to avoid unintentionally restricting common industry activities, such as Maximal Extractable Value (MEV), that are integral to the functioning of crypto market.
• Stablecoin Issuance: The regulated activity of issuing stablecoins has been simplified. Authorisation is still required only for UK-based issuers or those arranging issuance from a UK establishment, meaning cross-border issuance remains outside the UK regime.
• Broader Exclusions: Exclusions from regulated trading activities have been expanded to avoid capturing routine activities like arranging communications. New exclusions also ensure merchants using crypto for goods or services, and firms conducting “incidental activities” are not inadvertently caught by the regime.
• Financial Promotions: As expected, the regime is being updated to include custody and staking-as-a-service within the scope of financial promotions rules.
• Geographical Scope: The territorial reach is largely unchanged — firms serving UK retail clients must be UK-authorised (the specifics of legal structure are being consulted on separately), while those serving UK institutional clients can continue cross-border business without a UK licence.
• Transitional Arrangements: The new rules are set to take effect from 25 October There will be an application window for existing firms to submit authorisation applications, allowing them to continue operating while their application is processed. Overseas firms currently using the “Section 21 approver” regime can establish a UK subsidiary and continue operations until their UK application is determined.

Firms operating within the crypto industry should review the draft carefully and consider how the new requirements may impact their business models, compliance obligations, and market access. With the new regime set to take effect from October 2027, now is the time for crypto businesses to prepare for the transition and engage with the evolving regulatory landscape. We expect a good amount of transition period for firms to apply for the relevant licences prior to October 2027.

FCA publishes three consultation papers on crypto regulatory regime

As outlined above, the UK government’s draft Cryptoasset Regulations will bring cryptoassets within the UK regulatory perimeter. In response, the FCA has published three key consultation papers proposing rules and guidance for the sector:

• CP 25/40 (Regulating Cryptoasset Activities): This builds on a number of previous consultations and discussion papers, in particular DP25/1 and CP25/25. This CP proposes rules and guidance for new cryptoasset activities introduced by the Cryptoasset Regulations, such as operating trading platforms, acting as intermediaries, lending and borrowing, staking, and decentralised finance. Going forward, firms and individuals will need FCA authorisation to conduct these activities in the UK and must comply with the FCA Handbook (CP25/25) and other relevant guidance as part of the Crypto Roadmap.
• CP 25/41 (Admissions & Disclosures and Market Abuse Regime): This builds on DP24/4, and proposes requirements for trading platforms, public offerors, intermediaries, and stablecoin issuers to implement robust admission and disclosure processes, conduct due diligence, and provide clear, accessible information to support informed investment decisions. It also introduces a tailored Market Abuse Regime to address risks such as insider dealing, unlawful disclosure of inside information, and market manipulation. These measures include specific provisions for UK-issued qualifying stablecoins and form part of the FCA’s broader, evolving approach to cryptoasset regulation.
• CP 25/42 (Prudential Regime for Cryptoasset Firms): Sets out prudential requirements for firms seeking authorisation, including trading platforms, staking, and dealing in cryptoassets. The proposals are designed to enhance consumer protection, market integrity, and competition, while ensuring firms are financially resilient.

We will be sharing a series of summaries and insights on these consultation papers – look out for further updates from us.

Bank of England publishes consultation paper on systemic stablecoins

Following the discussion paper on regulatory regime for systemic payment systems using stablecoins and related service providers in 2023, the Bank of England has released a consultation paper ahead of finalising the new regulatory framework for systemic stablecoins that could be widely used for payments in the UK. Of note:

This, combined with the definition of qualifying stablecoin in the Cryptoasset Regulations, leaves stablecoins in the UK explicitly not being treated as electronic money (and no possibility for tokenised e-money), while in Europe under MiCA and PSD3, E-money Tokens being explicitly governed as e-money. Whether and how assets will be able to be issued under both regimes will be interesting to see.

Clients considering issuing, investing in, or using stablecoins in the UK should ensure compliance with these requirements and monitor further regulatory developments as the regime is finalised.

FCA publishes consultation paper on progressing fund tokenisation

On 14 October 2025, the FCA released a consultation paper (CP25/28) setting out proposals to facilitate the adoption of tokenisation in the UK asset management sector. These proposals aim to provide firms with more clarity and confidence to adopt tokenisation in fund management, and ensure that the proposed rules are fit for the future.

Particularly, the FCA outlines three stages to progress tokenisation:

• Stage one: Tokenisation of funds. This involves using distributed ledger technology (DLT) to record fund unitholders and process transactions, increasing efficiency, reducing costs, and improving transparency; this is already being implemented in the UK with further guidance in development.
• Stage two: Tokenisation of assets. This goes further by converting underlying assets (such as bonds or equities) into digital tokens, enabling direct digital ownership, more flexible investment solutions, and reduced reliance on intermediaries.
• Stage tree: Tokenisation of cash flows. This breaks down tokenised assets into individual cash flows (like interest or dividends), allowing these to be held or traded separately, supporting highly customised investment strategies and creating new trading opportunities.

The FCA is expected to publish a policy statement in the first half of 2026. If you would like to discuss tokenisation of fund units further, please reach out to my colleagues Oli Ward and John Dooley.

FCA lifted the ban on retail access to certain cETNs

You will have seen that the FCA lifted the ban on retail access to crypto exchange traded notes (cETNs) on 8 October 2025, allowing retail consumers to invest in cETNs listed on the Official List and traded on a UK Recognised Investment Exchange. This has brought the UK closer to the US and Europe in its approach, where retail customers have been able to invest in crypto through a regulated wrapper for years. However, the ban on derivatives referencing cryptoassets being offered to retail customers remains in place.

It is important to note that while most ETPs are not treated as such, cryptoasset ETPs are classified as Restricted Mass Market Investments, just like crypto. As such, firms must follow the restrictions under COBS 4.12A which require firms to include prescribed risk warnings in promotions, categorise their clients as High-net Worth, Restricted, or Sophisticated, and impose a 24-hour cooling off period before an investment can be made.

Digital assets recognised as personal property in the UK

The Property (Digital Assets etc) Act 2025 came into force on 2 December 2025, meaning digital assets are formally recognised as personal property under UK law. This has several important implications for crypto firms:

• Increased Legal Certainty: The recognition of digital assets as personal property provides greater legal clarity regarding ownership, transfer, and use of digital assets. This should hopefully make it easier to enforce rights and obligations in commercial arrangements.
• Potential for Improved Dispute Resolution: In cases of theft, fraud, or insolvency, crypto customers may benefit from clearer legal remedies and processes for the recovery or tracing of digital assets, as courts are now able to treat these assets as property.
• Broader Range of Financial Services: The Act may enable crypto firms to develop a wider range of services—such as secured lending, custody, and structured products—using digital assets as recognised property, which could encourage greater institutional participation.

To discuss this further, please reach out to my colleague Oli Ward.

Cryptoasset reporting: extension of CARF to UK resident users

In 2023, following international consultation, the Organisation for Economic Co-operation and Development (OECD) issued a publication entitled ‘International Standards for Automatic Exchange of Information in Tax Matters: Crypto-Asset Reporting Framework and 2023 update to the Common Reporting Standard’ (CARF). CARF provides for the automatic exchange of information on cryptoassets, similar to the way in which the Common Reporting Standard (CRS) provides for exchange of information on financial accounts. In parallel, certain amendments were made to the CRS. UK, USA, Canada and most EU member states confirmed their intention to implement CARF.

The UK has since implemented CARF into domestic legislation in The Reporting Cryptoasset Service Providers (Due Diligence and Reporting Requirements) Regulations 2025, which were enacted in June 2025 – but come into force in a couple of weeks on 1 January 2026. The rules require a UK crypto-asset service provider to undertake due diligence, record keeping and reporting obligations in respect of in-scope crypto-asset transactions. First reports under the regulations are required to be provided to HMRC by 31 May 2027. The information collected includes the activities and tax residency of their users. Once received, HMRC will exchange information on non-UK users with jurisdictions who have also implemented the CARF.

CARF does not currently require a reporting cryptoasset service provider to collect information on a domestic customer. However, the UK Autumn Budget 2025 announced an extension to the UK rules. With effect from a date on or after Royal Assent to the Finance Bill, the rules will require UK-based reporting cryptoasset service providers to also collect and report information concerning UK resident customers. This means HMRC will have CARF data on all UK taxpayers using a UK based provider together with information concerning UK taxpayers from overseas providers received through the exchange of information under CARF.

EU Commission launches major package to fully integrate EU financial markets

The European Commission has announced a set of measures to make the EU’s financial services market more integrated and competitive, including supporting innovation in crypto-assets. The package proposes amending the regulatory framework for DLT to make it more flexible and legally certain, making them more flexible and clear to help new technologies take off in the financial sector. Crucially, the package also proposes the transferring direct supervisory powers over all Crypto-Asset Service Providers (CASPs) to the European Securities and Markets Authority (ESMA). The intention is to make oversight more consistent across member states, and seems to be in direct response to suggestions from particular European regulators that were concerned about a lack of a level playing field. While these changes could be particularly impactful, they are unlikely to take place for a while.

ESMA Statement on MiCA Transitional Measures

As we enter the last 6 months of MiCA transitioning, ESMA published a reminder that CASPs need to prepare for MiCA authorisation and have clear wind-down plans in place if they aren’t authorised in time, so clients are protected. It also reminds national regulators to be strict with last-minute applications and be ready to take action against unauthorised services. If you are a VASP and have not yet started the MiCA authorisation process, we recommend that you do so without delay to ensure business continuity. Please do get in touch if you would like to discuss this.

Developments in Hong Kong

The Hong Kong Securities & Futures Commission (SFC) issued two new circulars that allow SFC-licensed virtual asset trading platforms (VATPs) to access global order books and broaden the range of virtual asset (VA) products and services that can be offered. Under Circular on shared liquidity by VATPs, VATPs are now permitted to integrate shared order books with those of global affiliate VATPs, subject to additional guardrails e.g. pre-funding, a joint surveillance programme and maintaining a reserve fund for client compensation. The intention is to improve market efficiency, provide access to deeper global liquidity, tighten price spreads, and enhance price discovery.

In addition, the Circular on expansion of products and services of virtual asset trading platforms suggests that the token admission requirement to have a 12-month track record has been waived where the tokens are being offered to professional investors. This will also apply to stablecoins authorised by HKMA that are offered to retail. The Circular also confirms that SFC-licensed VATPs are now explicitly permitted to distribute digital asset-related products and securities and VATPs are now able to apply to provide custody of tokens that are not traded on their platforms.

Julia Leung, CEO of the SFC, announced that the SFC is reviewing feedback from the its recent consultations on the proposed licensing regimes from VA dealing and custodian services, and is minded to expand the scope of VA dealers’ licensing to cover VA advisory and VA management and is discussing these with the Government. It is also considering stricter requirements on private key security, and only robust and reliable players in Hong Kong will be licensed.

The Financial Services and the Treasury Bureau (FSTB) is continuing to push ahead in tokenised bond issuances, enabling on-chain settlement for securities and cash tokens. It has noted a reduction in settlement cycles from 5 days to just 1. Additionally, the Hong Kong government is advancing initiatives under the “LEAP” framework from the Policy Statement 2.0 on the Development of Digital Assets in Hong Kong. This covers “Legal & Regulatory Streamlining”, where legislation is reviewed to ensure compatibility with smart contracts going forward, “Expanding Tokenised Products”, with tokenisation efforts being broadened into new areas like maritime investments, “Advancing use cases and cross-sectoral collaboration”, with ‘Cyberport’ being used as an incubator for commercialization, and “People and partnership development”, with Hong Kong seeking to strengthen talent development efforts in partnership with the market and universities. If you would like to discuss developments in the Hong Kong market further, please reach out to my colleague Kenneth Hui.

Updates from the Middle East

There have also been a number of developments in the UAE. The Dubai Financial Services Authority (DFSA) published consultation paper 168 on 1 October 2025 to propose a comprehensive set of amendments to the existing cryptocurrency regime in the DIFC. You may be familiar with the existing position in the DIFC with the DFSA-led “Recognised Crypto Token” list (excl. fiat-backed tokens), where firms could only deal with assets approved by the DFSA. This will move to a firm-led suitability assessment. Under this model, authorised firms will be required to conduct and evidence their own assessment of whether a crypto token is suitable for use in relation to Regulated Activities (as defined in the DFSA Rulebook), having regard to criteria such as transparency, regulatory status in other jurisdictions, market liquidity, technology, and compliance with DFSA rules. Firms will be required to publish and regularly update a list of tokens they have deemed ‘suitable’. This is very much a positive development for the DIFC.

For fiat-backed tokens, the DFSA will retain direct oversight, maintaining a published list of approved tokens and a policy statement outlining the assessment criteria. The proposals also include the removal of “Recognised Jurisdiction” requirements, thereby broadening the range of permissible home jurisdictions for crypto businesses. Additional amendments address the expansion of fund and custody provisions, the introduction of new reporting and disclosure obligations (incl. monthly returns on crypto token activities), and updates to client classification and prudential requirements. The stated objective is to align the DFSA’s framework with international cryptocurrency standards (and the current FSRA cryptocurrency framework), enhance market integrity, and ensure the regime remains fit for purpose as institutional activity as the DIFC expands.

Note that this remains a proposed framework at this stage and accordingly is subject to change upon final implementation. There is no specific timeline for implementation provided in Consultation Paper 168 itself. The paper states that, following the public consultation (which closed on 31 October 2025), the DFSA will decide which changes to the proposed regime are necessary, amend the draft legislation as appropriate, and then publish the final version of the Rulebook modules on its website.

FSRA publishes consultation paper no. 9 of 2025

Financial Services Regulatory Authority (FSRA) published consultation no. 9 of 2025 to propose a comprehensive regulatory framework for activities involving fiat-referenced tokens (FRTs), or stablecoins, in the ADGM. These rules have now been finalised by the FSRA through rule amendments taking effect from 1 January 2026 (more information, see here). The proposals expand the scope of regulated activities to include custody, dealing, payment services, and market operations involving FRTs, in addition to issuance. The FSRA will maintain a published list of “Accepted FRTs,” including both domestic and foreign stablecoins, subject to criteria such as traceability, adequacy of reserves, and the regulatory standards of the issuer’s jurisdiction. The framework distinguishes between investment and payment use of FRTs, with corresponding authorisation requirements, and introduces specific conduct, disclosure, and prudential requirements for firms handling FRTs. The proposals also include targeted amendments to the Financial Services and Markets Regulations, Conduct of Business, Fees, and Prudential Rulebooks to reflect FRT-specific requirements. This initiative forms part of ADGM’s broader objective to provide clear, proportionate, and risk-based rules for firms operating in the stablecoin and fiat-referenced token markets.

FSRA publishes consultation paper no. 10 of 2025

The FSRA consultation paper no. 10 of 2025 (issued on 30 September 2025) sets out a proposed regulatory framework for the staking of virtual assets (VAs) within ADGM. The framework clarifies that staking activities involving client assets will be regulated when conducted by authorised VA custodians or asset managers, while solo staking and technical staking services without asset custody are excluded from the regulatory perimeter. Under the proposed regime, only virtual assets that have been approved and accepted by the FSRA as “Accepted Virtual Assets” may be staked. The proposals impose specific legal obligations on Authorised Persons, including requirements to conduct due diligence on staking service providers and smart contracts, provide clear and fair disclosures to clients regarding staking risks and terms, and obtain FSRA non-objection prior to engaging in staking activities with client assets. The framework is intended to provide legal certainty and investor protection, aligning staking oversight with the broader ADGM virtual asset regime and international best practices.

This remains a proposed framework at this juncture and accordingly is subject to change in final implementation (consultation period closed on 31 October 2025). Implementation timelines for the requisite policy changes have not yet been confirmed; the FSRA has indicated that it is assessing consultation feedback ahead of final rulemaking.

UAE Federal New Central Bank Law

At the federal level in the UAE, the New Central Bank Law (which repealed the previous Central Bank Law, Federal Decree-Law No. 14 of 2018, as well as the Insurance Law, Federal Decree-Law No. 48 of 2023 and consolidates the regulation of banking, payments, financial market infrastructures and insurance under a single statute) introduces an expanded regulatory perimeter and enhanced supervisory powers relevant to virtual asset service providers (VASPs) and payment token businesses. The law grants the Central Bank explicit authority to license, regulate, and supervise a wide range of financial activities, including newly enumerated activities such as open finance services and payment services using Virtual Assets, as well as technology enabled financial activities involving Virtual Assets, payment tokens and other emerging technologies. Separately (but still relevant to cryptocurrency activities and VASPs in the UAE), it introduces a strengthened administrative and criminal penalty regime for non-compliance, supports cross-sectoral coordination with other UAE regulators and financial free zones, and mandates robust client protection, disclosure, and anti-fraud measures. Additionally, carrying on Licensed Financial Activities without an appropriate central bank licence is now a criminal offence, and the New Central Bank Law has implications for free zone firms that market or provide services to onshore UAE customers. While not a dedicated virtual asset regime, the law provides a legal foundation for future guidance on payment-token structures, licensing, and consumer protection for digital asset firms operating in the UAE (particularly those offering VA-based payment services into the onshore market).

The UAE President issued the New Central Bank Law on 8 September 2025. It was published in the Official Gazette on 15 September 2025 and entered into force on 16 September 2025.

To discuss any of these developments in the UAE, please reach out to my colleague Adam Wolstenholme.