Crypto Regulation in 2026: What Changed and What’s Ahead

In 2025, the global cryptocurrency market hit $4 trillion for the first time in history, indicating the rise of virtual assets in both scale and popularity. Consequently, the risk of financial crime involving digital assets has never been higher.

Given this context—and considering crypto’s inherent volatility as evidenced by October’s sharp price crash—regulators are intensifying their focus on stability, fraud, money laundering risks, and overall market integrity. 

Authorities around the world are accelerating their virtual asset agendas, from establishing frameworks for stablecoins and harmonizing agreements on taxation to escalating enforcement actions and demanding tighter controls on DeFi. 

This article explains the major regulatory shifts that occurred in 2025 and the emerging trends that will shape oversight in 2026.

Global crypto regulation: Key shifts in 2025

In 2025, more regulators worldwide developed frameworks allowing for greater enforcement and oversight of virtual assets. As a result, virtual asset service providers (VASPs) face greater compliance obligations. According to the Financial Action Task Force (FATF), 85 of 117 jurisdictions have passed or are in the process of passing legislation implementing the Travel Rule for virtual assets, up from 65 in 2024. A further 14 jurisdictions are currently working on Travel Rule implementation to help monitor virtual asset activity. 

In its 2025 Targeted Update assessing VASP compliance, the FATF highlighted that jurisdictions have made progress since 2024 toward implementing AML regulations and taking enforcement actions. Nevertheless, it states there is a “need for further work on licensing and registration … jurisdictions continue to face difficulties in identifying natural or legal persons that conduct VASP activities.”

Meanwhile, the G20’s Financial Stability Board (FSB) flagged “significant gaps and inconsistencies” in global crypto regulation in October 2025. A fragmented ecosystem could be exploited by illicit actors, such as for money laundering or the financing of terrorism.

As regulations have hardened, VASPs face stricter demands (e.g., in licensing and audits) with cross-border operations becoming more complex and costly. However, institutional interest is also growing thanks to this greater regulatory clarity. The 7th Annual Global Crypto Hedge Fund Report reports that over half of traditional hedge funds now have some form of exposure to virtual assets, the highest proportion yet. While tightening oversight is complicating operations for VASPs, it is also driving increased trust as stablecoins and other virtual assets become increasingly mainstream.

In short, stricter regulations in 2025 have increased compliance challenges and operational complexity for VASPs, yet they are also fostering greater market trust and driving growing institutional adoption of virtual assets.

Suggested read: Explore Travel Rule Implementation

What governments got right in 2025

Many regulators took significant steps to protect retail users as virtual assets became more mainstream. For example, the EU’s MiCA regime fully came into application on December 30, 2024, completing a two-stage rollout and introducing mandatory asset segregation, complaint-handling standards, and transparent risk disclosures to promote consumer protections.

2025 also saw greater coherence in licensing and definitions, with the EU, US, UK, Hong Kong, Singapore, UAE, and more jurisdictions moving toward clear requirements that reduce uncertainty for VASPs operating across multiple jurisdictions.

Governments around the world, such as the USA through its GENIUS Act, have also started to increasingly hold virtual assets like stablecoins to similar standards as traditional financial assets. This helps AML/KYC protocols adapt to a modern financial landscape in which virtual assets hold an increasingly dominant role.

This has led to greater institutional market clarity, showing traditional financial institutions that regulate virtual asset activity can be integrated within existing frameworks.

What went wrong in crypto regulation in 2025

Over-regulation, however, raised fears of barriers to innovation, with regulators applying rules to crypto firms that could hinder their development. High capital requirements for stablecoin providers in jurisdictions such as Hong Kong, while in place to protect the public, effectively limit market entry to already established players with significant assets. 

Despite emerging global standards, actual regulatory implementation is inconsistent. In the global crypto ecosystem, a weakness in one jurisdiction effectively makes the whole system weaker. A 2025 PwC report notes of the EU’s MiCA that “differences in implementation could impact market access and operational strategies”. 

Even when efficient rules are in place, actual enforcement of the rules remains an issue. Additional compliance requirements also mean additional compliance costs, raising the barriers to entry further, as well as the cost of doing business.

Tighter reserve and disclosure rules for stablecoin issuers also risked making participants exit markets or operate offshore. At the same time, DeFi platforms have faced regulatory pressure to incorporate identity-attestation mechanisms, prompting questions about how decentralized they can truly remain.  

FATF’s 2025 update to Recommendation 16 (the basis of the global Travel Rule) also put further pressure on VASPs and compliance teams. This revision was designed to tighten cross-border transparency, but adds operational burden and fails to address long-standing issues with the Travel Rule. Fragmented national adoption and limited interoperability still make it difficult for providers to reliably exchange originator and beneficiary data. 

Global trends shaping crypto in 2026

These are the main patterns we expect to continue into 2026:

CBDCs and tokenized assets
Many major central banks around the world have already advanced pilot programs for central bank digital currencies (CBDCs) and tokenized securities. Research from AMINA Bank also shows how asset tokenization is moving from proof-of-concept to market use. We will likely see more mainstream tokenized asset use in 2026.

Stablecoin harmonization
As stablecoins become more mainstream, regulators are determining the best approaches to regulating them. A July 2025 EY report shows stablecoin regimes are converging toward common themes of full-reserve backing transparency, clear redemption rights, and custody and safeguarding of client assets. 

Regulated DeFi and on-chain attestations
DeFi is coming under greater scrutiny. Regulators across the world, including the US and EU, are keen to explore how AML laws may apply to DeFi platforms, which often operate in a gray area. This could mean integrating compliance-friendly mechanisms such as on-chain identity attestations. DeFi firms will likely need to prepare for “same risk, same rule” enforcement across decentralized networks. 

Exchange oversight and reserve audits
Regulators are continuing to strengthen oversight of exchanges and VASPs as virtual assets become more integrated into the mainstream financial infrastructure. The Basel Committee on Banking Supervision, for example, has approved frameworks for banks to disclose virtual asset exposure from 2026. Meanwhile, regulators will increasingly expect proof-of-reserves as it becomes part of VASP compliance obligations. 

Cross-border tax reporting tightening
The OECD-led Crypto-Asset Reporting Framework (CARF) has been endorsed by the G20 as an international standard to transmit information between tax authorities relating to virtual assets. As the first CARF exchanges are expected in 2027, affected parties will need to make sure they are ready to comply if affected.

State of crypto regulations: Regional overview

North America

United States

Travel Rule: Implemented

Regulatory trends

Stablecoin legislation

In July 2025, President Donald Trump signed the GENIUS Act legislation into law, requiring stablecoins to be backed 1-to-1 by the US dollar or other low-risk assets. The United States has also enacted the Anti-CBDC Surveillance State Act, which prohibits Federal Reserve banks from establishing or issuing a US CBDC.

SEC and CFTC crypto clarity

In September 2025, the SEC and CFTC issued a joint statement that they were launching a cross-agency initiative to promote regulatory clarity for blockchain-based innovation in the United States. This is part of a general US policy direction toward openness for the virtual asset sector in the country.

Exchange oversight & custody reforms

State regulators across the United States have increased regulations for crypto exchanges and implemented custody reforms, prompting conflict with the US federal government over interference.

Tax reporting 

The US Treasury and IRS have implemented new reporting rules for digital-asset brokers, including exchanges and custodial wallets. These rules expand transaction-level reporting obligations and feed into wider global tax-information-exchange initiatives affecting virtual assets.

Suggested read: Crypto Regulations in the US—A Complete Guide (2025)

Canada

Travel Rule: Implemented

Regulatory trends

Registration requirements

Canada requires virtual asset trading platforms providing services to Canadians to register with provincial regulators. Registration frameworks emphasize investor disclosures, custody controls, and clear risk statements.

Exchange compliance & staking rules

Staking services in Canada operate under strict conditions set by the CSA, including segregation of staked assets, liquidity requirements, and conflict-of-interest controls. Platforms must also hold client assets with qualified third-party custodians that meet regulatory security standards.

Europe

European Union

Travel Rule: Implemented

Regulatory trends

MiCA Phase 1 & Phase 2 implementation

MiCA has been introduced in two phases. The first phase was introduced on June 30, 2024, and regulates the authorization and supervision for stablecoins, divided into asset-referenced tokens (ARTs) and e-money tokens (EMTs). The second phase was introduced on December 30, 2024, and covers other crypto assets and crypto asset service providers (CASPs).

Stablecoin issuer obligations

Stablecoin issuers must publish white papers, maintain high-quality reserve assets, and guarantee timely redemption for users. Larger stablecoins face additional supervision.

CASP licensing pathways

CASPs are licensed through national authorities, but are granted EU-wide passporting. Key requirements include AML controls, operational resilience, IT governance, and consumer-protection practices.

DeFi pilot regime

EU sandbox programs continue to explore compliant decentralized trading and tokenized instruments. The ESMA operates its DLT Pilot Regime to provide the legal framework for crypto asset trading and settlement for transactions that qualify as financial instruments under the EU’s MiFID II.

The EU and TFR

The EU Transfer of Funds Regulation (TFR) 2023/1113, adopted on May 31, 2023, aligned the EU’s legal framework with FATF standards by extending the "Travel Rule” to VASPs. It also requires the implementation of EDD measures on third-country counterparty CASPs, verification of control or ownership of unhosted wallets, and compliance with AML/CFT measures, among other obligations.

Check out the regulation for further details.

United Kingdom

Travel Rule: Implemented

Regulatory trends

Crypto as a regulated activity framework

Crypto activities falling under the definition of “financial services” now require FCA authorization, creating unified perimeters for exchanges, custodians, and service providers.

Stablecoin payment rules

Stablecoin payment rules in the UK are still in development and have not yet come into force. The government has outlined a future framework in which stablecoins used for payments would be subject to requirements on backing, redemption, and issuer governance, with payment-system regulators gaining expanded supervisory powers over systemic arrangements. In 2025, the FCA also advanced these plans through Consultation Paper CP25/14, which proposes detailed rules for stablecoin issuance and cryptoasset custody.

Financial promotions regime

All crypto promotions must also be FCA-approved. This includes rules on risk warnings, cooling-off periods, and marketing-channel oversight.

Sandbox programs for tokenized assets

The UK’s Digital Securities Sandbox enables regulated firms to test tokenized securities issuance, settlement, and market-infrastructure models under real regulatory supervision.

Suggested read: Breaking News, Explained: Hong Kong’s LEAP and Licensing for Stablecoin Issuers

Asia-Pacific

Singapore

Travel Rule: Implemented

Regulatory trends

MAS tightening around stablecoins

Singaporean regulator MAS’s single currency stablecoin framework mandates high-quality reserve backing, redemption rights, operational resilience, and clear issuer accountability for regulated stablecoins.

Institutional DeFi pilots

Project Guardian continues to test institutional DeFi models, including tokenized collateral, automated settlement, and regulated liquidity pools.

Exchange licensing standards

Exchanges and digital-asset service providers in Singapore must be licensed under the Payment Services Act, meet AML and Travel-Rule obligations, and are expected to satisfy operational-resilience and cybersecurity standards. Exchanges face strict requirements for cybersecurity, custody segregation, and cross-border compliance.

Hong Kong

Travel Rule: Implemented

Regulatory trends

Retail trading rules

Hong Kong permits retail access to digital assets only through licensed Virtual Asset Trading Platforms (VATPs). Retail users may trade SFC-eligible large-cap tokens that meet strict listing criteria set by the SFC. Exchanges must implement suitability checks, provide clear risk disclosures, and maintain market-integrity monitoring.

Stablecoin regulatory framework

Hong Kong has introduced a dedicated stablecoin issuer licensing regime under the HKMA and FSTB. It proposes high-quality reserve-asset backing, segregation and custody requirements, independent audits, clear redemption rights, and governance standards. Algorithmic stablecoins and unbacked arrangements will face restrictions.

ETF & tokenized-asset guidelines

Hong Kong continues expanding regulated access to tokenized finance. The SFC has issued guidance for tokenized finance. Recent pilots include tokenized green bonds issued under HKMA oversight.

Japan

Travel Rule: Implemented

Regulatory trends

Strict exchange requirements

Under the Payment Services Act and the Financial Instruments and Exchange Act, Japan maintains some of the strictest exchange-operating rules globally, with mandatory insurance, strict hot-wallet limits, and detailed asset-segregation procedures.

Stablecoin issuer oversight

Under Japan’s updated Payment Services Act, only banks, trust companies, and licensed funds-transfer service providers may issue yen-backed stablecoins, subject to strict reserve, custody, and redemption obligations.

Middle East

United Arab Emirates (UAE)

Travel Rule: Implemented

Regulatory trends

VARA (Dubai) rulebook updates

VARA continues refining licensing tiers for exchanges, custodians, brokers, and staking providers, with a focus on governance, stability, IT controls, and financial crime prevention.

Tokenized-asset frameworks

The UAE is building frameworks to support tokenized real-world assets, clarifying how custodianship, ownership, and settlement work for digital representations of securities and commodities.

Licensing for global exchanges

Dubai and Abu Dhabi remain major licensing hubs for international exchanges due to their clear requirements and predictable supervisory processes.

Suggested read: A Lighthouse in the Crypto Storm: How Dubai’s VARA Combines Market Resilience and Travel Rule Excellence

Saudi Arabia & GCC expansion

Travel Rule: Not implemented

Regulatory trends

Digital-asset pilot programs

Saudi regulators have run pilots for tokenized payments and real-world applications, building supervisory experience before finalizing a national framework.

Institutional licensing developments

Across the Gulf Cooperation Council (GCC), regulators are upgrading their digital-asset frameworks and have expressed interest in greater cross-border coordination.

Latin America

Brazil

Travel Rule: In progress

Regulatory trends

Exchange licensing law implementation

Brazil is moving toward a fully supervised framework for crypto-asset service providers under the Central Bank of Brazil (BCB). In November 2025, the BCB issued Resolutions 519, 520, 521, which introduced VASP authorization requirements and set out a two-phased implementation of the Travel Rule. In the first phase, Brazilian VASPs will need to transmit relevant data between themselves for domestic transfers by February 2, 2027. The second phase extends this to cross-border transfers and will be in place by February 2, 2028. Until then, VASPs may rely on self-declarations documenting customer, beneficiary, asset, and purpose details, which must be available to the BCB on request.

Stablecoin & payments regulation

Brazil is aligning oversight of fiat-pegged virtual assets with its foreign-exchange and payments-sector rules, introducing requirements for transparency, governance, and operational-risk controls similar to those applied to traditional payment institutions.

Argentina

Travel Rule: Not implemented

Regulatory trends
Policy shift under the new administration

In Argentina, regulatory direction under the new administration is moving toward stronger AML supervision for virtual asset activities, clearer tax-treatment frameworks for virtual asset transactions, and incorporation of virtual asset reporting into broader fiscal and tax reforms.

Mexico, Chile, Colombia

Regulatory trends

Fintech-law expansions

In Chile, the 2023 Fintech Law (Law 21.521) brings virtual asset trading, custody, and related intermediation into regulated perimeters.

AML alignment with global standards

Across Mexico, Chile, and Colombia, authorities are tightening AML expectations for crypto-related activities, focusing on customer due diligence, suspicious-transaction reporting, and implementation of FATF standards on virtual assets.

Suggested read: Crypto Compliance in Argentina: What You Need to Know (2025)

Africa

Nigeria

Travel Rule: Implemented

Regulatory trends
Exchange regulations & mobile-money integration

In Nigeria, regulators are developing clearer licensing standards for virtual asset exchange platforms and are leveraging the country’s existing mobile-money and payments-system frameworks to strengthen oversight of these services.

South Africa

Travel Rule: Not implemented

Regulatory trends

FSCA regulatory regime

Virtual assets are designated as financial products under General Notice 1350 of 2022, placing service providers under FSCA supervision.

Licensing requirements for providers

VASPs must obtain Financial Service Provider (FSP) licences, demonstrate AML controls, and comply with reporting and governance obligations.

The road ahead for crypto regulations

Regulators are moving toward shared expectations for stablecoin reserves, exchange-custody protections, Travel Rule enforcement, and clearer definitions of VASPs. Global bodies—including the FATF, IOSCO, the FSB, and the OECD—are pushing for coordinated implementation to reduce cross-border regulatory gaps and supervisory blind spots, thereby helping to combat money laundering more efficiently.

In 2026, compliance costs will likely therefore rise. While jurisdictions remain uneven in their enforcement capabilities, increasing regulatory and operational risk for firms operating across multiple markets, there are signs of convergence. This presents an excellent opportunity for global expansion as regulations converge.

Businesses with robust AML programs, transparent reserves, and secure operations are well-positioned to benefit as regulators increasingly prefer licensed, well-controlled platforms. Growth areas include tokenized assets, regulated DeFi infrastructure, on-chain identity attestations, and cross-border payment solutions that meet emerging reporting and disclosure rules. 

VASPs should expect closer scrutiny along with more intrusive audit obligations. Firms operating internationally should also prepare for expanded tax-reporting requirements under CARF and tighter supervision.