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Global Digital Markets Regulation Intensifies in May with Focus on Stablecoins, Market Structure, and CBDCs

Global efforts to establish clear regulatory frameworks for digital assets gained significant momentum in May, with a concentrated focus on stablecoins, overall market structure, and the ongoing exploration of Central Bank Digital Currencies (CBDCs). Key financial centres, including those in the European Union, the United Kingdom, Hong Kong, and the United States, have all taken notable steps, underscoring a collective drive towards comprehensive oversight of the rapidly evolving cryptocurrency economy.


Several overarching themes characterised May's regulatory landscape. Stablecoins emerged as a primary area of attention, with Hong Kong passing a significant Stablecoins Bill and the UK's Financial Conduct Authority (FCA) launching consultations on their issuance and custody. In the United States, legislative discussions around stablecoins, including the GENIUS Act of 2025, continued, supported by analysis from the Congressional Research Service (CRS). International bodies like the Bank for International Settlements (BIS) also contributed research on the impact of stablecoins.


The development of comprehensive crypto frameworks also saw considerable progress. The UK was particularly active, with the FCA initiating consultations on a prudential regime for cryptoasset firms and releasing a broad discussion paper that covers trading, staking, lending, and Decentralised Finance (DeFi). The US also saw continued legislative movement aimed at defining its digital asset market structure.



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Risk management and investor protection remained central to regulatory actions. The European Union published a corrigendum related to risk management tools under the Digital Operational Resilience Act (DORA). In the US, a notable development was the restatement of a joint SEC and FINRA position on broker-dealer custody of digital asset securities, alongside SEC statements on staking and the tokenisation of real-world assets.


The advancement of Central Bank Digital Currencies (CBDCs) continued globally. The European Central Bank (ECB) provided updates on the implementation of the digital euro, and the US CRS published a report on central bank digital currencies (CBDCs), reflecting sustained engagement with the concept.


International cooperation and harmonisation were highlighted by the Bank of England's emphasis on the value of harmonised international payment rails. The BIS further contributed with working papers analysing cross-border crypto flows and the verifiability of Total Value Locked (TVL) in DeFi. Additionally, the growing intersection of digital assets with other emerging technologies was recognised, with the US Government Accountability Office (GAO) releasing a report on the use and oversight of Artificial Intelligence in financial services.


Regional Highlights:


  • Europe (European Union & Switzerland): The EU focused on refining existing regulations, notably with the DORA corrigendum. The ECB continued its developmental work on the digital euro. Switzerland also saw developments related to stablecoins.

  • United Kingdom: The UK displayed a proactive and comprehensive regulatory strategy. The FCA launched multiple consultations and discussion papers covering various facets of the crypto market. The Financial Markets Law Committee (FMLC) provided input on legal uncertainties in draft cryptoasset legislation, and the Bank of England contributed to discussions on international payment systems.

  • Hong Kong: A significant milestone was achieved with the passage of the Stablecoins Bill, positioning Hong Kong to implement a new licensing regime for stablecoin issuers by 2025, pending further consultation on detailed requirements.

  • United States: The US saw robust activity on both legislative and regulatory fronts. There was continued progress on digital market legislation, particularly concerning stablecoins, with the CRS offering detailed analysis. Regulatory bodies, such as the SEC, have issued statements and guidance on staking, tokenisation, and revisited their prior positions on digital asset custody.


Key Global Themes Emerge:


The regulatory developments in May highlighted several overarching themes:


  • Stablecoins Under the Microscope: Significant attention was paid to stablecoin regulation. Hong Kong led the way with the passage of its Stablecoins Bill, aiming for a new licensing regime to take effect in 2025. The UK's Financial Conduct Authority (FCA) has initiated consultations on the issuance and custody of stablecoins. In the US, legislative efforts around stablecoins, including the GENIUS Act of 2025, were prominent, supported by analysis from the Congressional Research Service (CRS). The Bank for International Settlements (BIS) also contributed research on the impact of stablecoins on safe asset prices.

  • Evolving Comprehensive Crypto Frameworks: Jurisdictions are moving towards more holistic regulatory frameworks for cryptoassets. The UK was particularly active, with the FCA releasing a broad discussion paper covering trading, intermediaries, staking, lending, and DeFi, alongside consultations on a prudential regime for crypto firms. The US also saw legislative movement concerning digital asset market structure.

  • Emphasis on Risk Management and Investor Protection: A strong focus on mitigating risks and protecting investors was evident. The European Union (EU) published a corrigendum to its Digital Operational Resilience Act (DORA) regarding risk management tools. In the US, the SEC and FINRA revisited their stance on broker-dealer custody of digital asset securities. At the same time, the SEC also issued statements on staking and the tokenisation of real-world assets.

  • Advancements in CBDC Exploration: Central banks continue to make headway in their investigation of CBDCs. The European Central Bank (ECB) provided an update on the implementation of the digital euro. The US CRS also published a report on CBDCs, indicating an ongoing assessment of their potential.

  • Drive for International Cooperation and Harmonisation: The need for global coordination was underscored. The Bank of England emphasised the benefits of harmonised international payment rails. The BIS released influential working papers analysing cross-border crypto flows and the verifiability of Total Value Locked (TVL) in DeFi.

  • Addressing Emerging Technologies like AI in Finance: The intersection of Artificial Intelligence and financial services is drawing regulatory attention, as evidenced by a US Government Accountability Office (GAO) report on AI use and oversight in the sector.


Outlook:


The regulatory developments in May underscore a clear global momentum towards establishing well-defined rules for the digital asset industry. While specific approaches and timelines may differ across jurisdictions, common objectives prevail: fostering responsible innovation, managing systemic and investor risks, enhancing market integrity, and preparing the financial system for future technological advancements. International collaboration and research from organisations such as the BIS will continue to be instrumental in shaping these national and regional regulatory landscapes.



 
 

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The posts listed on the 'What we think' webpages are our interpretation of regulatory developments we have been reading about. They should not be considered legal, regulatory or other advice. Contact us if you want to understand the impact of public policy, regulation and governance changes for you.

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