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Global Regulatory Developments in January 2025

This report provides a comprehensive overview of the significant global regulatory developments in January, focusing on the key areas of digital markets, artificial intelligence (AI), and central bank digital currencies (CBDCs).


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Europe


MiCA: Setting the Stage for Crypto-Asset Regulation

  • ESMA Supervisory Briefing on CASP Authorization: ESMA issued a supervisory briefing to National Competent Authorities (NCAs) on the authorisation of Crypto-Asset Service Providers (CASPs) under the Markets in Crypto-Assets Regulation (MiCA). The briefing aims to ensure a consistent and stringent approach to CASP authorisation across the EU, emphasising the need for substantial presence and operations within the EU, robust governance, and careful outsourcing management.

  • ESMA Opinion on Draft RTS on Conflicts of Interest: ESMA also published its opinion on the draft regulatory technical standards (RTS) on conflicts of interest for CASPs under MiCA, which guide the identification, management, and disclosure of conflicts of interest.

  • ESMA Public Statement on Non-MiCA Compliant Tokens: ESMA issued a public statement clarifying the regulatory requirements for CASPs dealing with non-MiCA-compliant asset-referenced tokens (ARTs) and e-money tokens (EMTs) and describing the provision of certain crypto-asset services related to these tokens.

  • EBA MiCA Explainer: The European Banking Authority (EBA) published a MiCA explainer that provides a comprehensive overview of the MiCA framework and its implications for the banking sector.

  • Joint Report on Recent Developments in Crypto-Assets: ESMA and the EBA released a joint report on recent developments in crypto-assets, highlighting key trends and risks in the crypto market.


Digital Markets: Exploring New Frontiers

  • EBA Consultation on Crypto Exposure Values: The EBA launched a consultation on the draft RTS on crypto exposure values under the Capital Requirements Regulation (CRR) to establish prudential requirements for banks' exposures to crypto assets.

  • ECB Working Paper on Bitcoin Trading Drivers: The European Central Bank (ECB) published a working paper analysing the global and local drivers of Bitcoin trading vis-à-vis fiat currencies, providing insights into the crypto market dynamics.

  • European Commission on Permissionless Blockchains: The European Commission released a communication on enhancing financial services with permissionless blockchains, exploring the potential benefits and challenges of integrating blockchain technology into the financial sector.


DORA: Strengthening Operational Resilience

  • Commission Rejects Draft RTS on ICT Subcontracting: The European Commission rejected the draft RTS on subcontracting ICT services supporting critical or essential functions under the Digital Operational Resilience Act (DORA), citing concerns that the draft exceeded the mandate given to the European Supervisory Authorities (ESAs).

  • ESAs Approve ToR for EU-SCICF Forum: The ESAs approved the terms of reference for the new EU-SCICF Forum under DORA, establishing a framework for coordinating responses to systemic cyber incidents in the financial sector.


Other Key Developments

  • ESMA Spotlight on Markets: ESMA published its Spotlight on Markets report for December 2024, providing an overview of key market trends and risks.

  • EU Competitiveness Compass: The European Commission released a communication on the EU competitiveness compass, outlining initiatives related to financial services, including sustainable finance and the Capital Markets Union.

  • ESMA Market Report on Crowdfunding: ESMA published its first annual market report on crowdfunding in the EU, providing insights into the size, structure, and trends of the European crowdfunding market.


United Kingdom


Digital Markets: Navigating the Evolving Landscape

  • FAQs on Digital Assets in Private International Law: The UK government published digital assets in private international law, clarifying the relationship with tax law, banking regulation, and financial markets.

  • Financial Services and Markets Act 2000 Amendment Order: The Financial Services and Markets Act 2000 (Collective Investment Schemes) (Amendment) Order 2025 was issued, changing the regulation of collective investment schemes.


FCA Regulation Round-Up

The Financial Conduct Authority (FCA) published its Regulation Round-Up for December 2024, providing updates on various regulatory initiatives, including launching the "My FCA" portal, data collection reforms, and the FCA and Practitioner Panel survey.


United States


Digital Markets: Strengthening Leadership

The US government released a report titled "Strengthening American Leadership in Digital Financial Technology," outlining its vision for promoting innovation and competitiveness in the digital finance sector.


International


CBDCs: Exploring the Future of Money

  • BoC on Privacy-Enhancing Technologies: The Bank of Canada (BoC) released a report on privacy-enhancing technologies for CBDC solutions, exploring ways to protect user privacy in a CBDC system.

  • BIS Working Papers on Privacy in Digital Payments: The Bank for International Settlements (BIS) published working papers on privacy-enhancing technologies for digital payments, mapping the landscape of available solutions.

  • BoE Design Note on CBDC Blueprint Framework: The Bank of England (BoE) released a design note outlining the key features and considerations for developing its CBDC blueprint framework.

  • BIS Papers on CBDCs and Fast Payment Systems: The BIS published papers on the relationship between CBDCs and fast payment systems, exploring their potential complementarities and challenges.

  • ECB Digital Euro State of Play: The ECB provided a progress update on the digital euro project, outlining the key milestones and considerations for its development.

  • Progress Update on the Digital Pound: The BoE provided a progress update on the digital pound project, discussing its potential impact on the payments landscape.


AI: Governance and the Future of Work

  • FSI Insights on AI Regulation: The Financial Stability Institute (FSI) published insights on policy implementation for regulating AI in the financial sector, discussing recent developments and challenges.

  • IMF on AI and the Future of Work: The International Monetary Fund (IMF) released a report on generative AI and its implications for the future of work, exploring the potential impact on employment and productivity.

  • WEF on AI in Financial Services: The World Economic Forum (WEF) published a report on AI in financial services, highlighting the transformative potential and key considerations for responsible adoption.

  • BIS on AI Governance: The BIS released a report on the governance of AI adoption in central banks. The report outlines guidelines for managing risks and ensuring ethical and responsible AI usage.

  • BIS Working Papers on AI and Data: The BIS published papers on using AI to analyse considerable holdings data and highlight opportunities for central banks.


Digital Markets: Tokenization and Cross-Border Flows

  • IMF on Cross-Border Crypto Flows: The IMF released a report on cross-border crypto flows, examining their measurement, drivers, and policy implications.

  • IMF on Tokenization and Market Inefficiencies: The IMF published a report on tokenisation and its potential impact on financial market inefficiencies, exploring both the benefits and challenges.

  • Mastercard on Asset Tokenization: Mastercard released a comprehensive asset tokenisation report highlighting its potential to transform financial markets and providing insights into its adoption.

  • OECD on Tokenization and DLT: The Organisation for Economic Co-operation and Development (OECD) published a report on tokenising assets and distributed ledger technologies in financial markets, exploring their implications for market efficiency and financial stability.


Conclusion:


January 2025 witnessed a surge in regulatory activity globally, with a clear focus on digital markets, AI, and CBDCs. These developments underscore the growing importance of these technologies in the financial sector and the need for regulatory frameworks that foster innovation while mitigating risks. Firms should proactively monitor these developments, engage with regulators, and adapt their strategies to ensure compliance and leverage new opportunities in the evolving financial landscape.


 
 

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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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