Global Regulatory Developments Report: August 2025
- James Ross
- Aug 29
- 8 min read
Executive Summary
August 2025 witnessed a continuation of key regulatory and supervisory initiatives across major financial jurisdictions, with a pronounced focus on operational resilience, digital asset market integrity, and the prudential treatment of crypto-exposures.
In Europe, the European Banking Authority (EBA) advanced its alignment of internal governance frameworks with the Digital Operational Resilience Act (DORA) and the latest Capital Requirements Directive (CRD VI). Concurrently, the European Systemic Risk Board (ESRB) emphasised the need for adequate resource allocation for pan-European cyber-incident simulation and coordination.
A landmark development in the United Kingdom saw the Financial Conduct Authority (FCA) lift its prohibition on retail access to crypto-asset Exchange Traded Notes (ETNs), signalling a calibrated shift towards mainstreaming these products within a regulated perimeter.
In Asia, Hong Kong operationalised its comprehensive stablecoin ordinance, a critical step in establishing a robust framework for issuers. The United Arab Emirates maintained momentum in its central bank digital currency (CBDC) development with the CBUAE's Digital Dirham initiative.
At the international level, a Bank for International Settlements (BIS) survey confirmed sustained global central bank engagement in CBDC research and development, while a separate BIS publication proposed a novel, blockchain-native AML compliance scoring model for crypto-assets. The United States market experienced a period of relative quiet in terms of new rule-making, suggesting a phase of regulatory consolidation and strategic preparation for future policy directives. This report provides a technical analysis of these and other pivotal developments.
🇪🇺 Europe
EBA Consultation on Revisions to Internal Governance Guidelines
On August 7 2025, the EBA launched a public consultation on targeted revisions to its Guidelines on Internal Governance. The proposed amendments are primarily designed to integrate the requirements of Regulation (EU) 2022/2554 (DORA) and the forthcoming CRD VI package. The consultation, which concludes on October 5, 2025, aims to clarify the documented roles, responsibilities, and accountability of management body members and key function holders. A significant component of the revisions involves establishing a prescriptive governance framework for third-country branches and embedding principles from the EBA's recent benchmarking report on diversity and gender-neutral remuneration policies within governance structures.
MiCA: Regulatory Technical Standards for Market Abuse Finalised
Level 2 measures, specifically the Regulatory Technical Standards (RTS) about the detection and reporting of market abuse under the Markets in Crypto-Assets (MiCA) Regulation, were finalised in August 2025.
DORA: Clarifications on Reporting Scope and Systemic Cyber Coordination
Specific guidance and clarifications regarding the materiality thresholds for incident reporting or the detailed scope of information to be included in the register of information under DORA were issued by the European Supervisory Authorities (ESAs) in August 2025.
DORA: ESRB Report on Pan-European Cyber Coordination
The ESRB published its second compliance report concerning the establishment of the pan-European systemic cyber incident coordination framework (EU-SCICF) on August 12, 2025. The report, while noting progress in developing the framework's protocols, critically emphasises the need for competent authorities to allocate sufficient financial and human resources for the execution of advanced crisis management and contingency exercises, which are essential for validating the framework's operational efficacy.
FinCrime: EBA Report on AML/CFT Supervisory Technology (SupTech)
On August 15, 2025, the EBA published a comprehensive report on the adoption and application of supervisory technology (SupTech) for Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) purposes. The report, based on a survey of EU National Competent Authorities, indicates that 47% of the identified SupTech tools and projects are now operational. Key benefits realised include enhanced data quality for risk-based supervision and more sophisticated analytical capabilities. However, significant implementation challenges persist, including data integrity issues, inflexible governance models, and resource constraints that inhibit the full-scale deployment of these technologies.
🇬🇧 United Kingdom
Digital Assets: FCA Lifts Ban on Retail Access to Crypto ETNs
In a significant policy recalibration, the FCA announced on August 1, 2025, its decision to rescind the prohibition on the sale of crypto ETNs to retail consumers. Effective October 8, 2025, retail investors will be permitted to access crypto ETNs listed and traded on UK Recognised Investment Exchanges. The FCA stressed that firms offering these products will be subject to the full scope of the financial promotion rules and the Consumer Duty, necessitating robust risk warnings and ensuring products are appropriate for the target market. The ban on crypto-asset derivatives for retail clients remains in place.
Payments: FCA Strengthens Safeguarding Regime for Payments & E-money Firms
On August 7 2025, the FCA released Policy Statement PS25/12, introducing significant enhancements to the safeguarding regime under the Payment Services Regulations 2017 and the Electronic Money Regulations 2011. The reforms are engineered to mitigate the risk of shortfalls in safeguarded client funds and to expedite their return in insolvency scenarios. The changes include a set of interim rules to improve compliance with existing provisions and introduce a £100,000 threshold for relevant funds, below which firms are exempt from the requirement to conduct an annual safeguarding audit.
Digital Assets: FMLC Highlights Legal Uncertainties in Stablecoin & Custody Rules
The Financial Markets Law Committee (FMLC) issued its formal response on August 11, 2025, to the FCA's consultation on proposed rules for stablecoin issuance and crypto-asset custody. The FMLC's submission identified several areas of legal uncertainty requiring clarification, particularly concerning the interaction between the proposed regime and existing property law, insolvency principles, and the application of client asset rules to digital instruments.
OpRes: HM Treasury Publishes G7 Framework for Cyber Incident Reconnection
The G7 Cyber Expert Group's Reconnection Framework, published by HM Treasury in June 2025, remained a focal point for operational resilience strategy throughout August. The framework provides a structured, principles-based approach for financial market infrastructures and firms to manage the risks associated with reconnecting to the economic system following a significant cyber disruption.
OpRes: FCA Cyber Coordination Group Shares Industry Insights
The FCA disseminated key insights from its Cyber Coordination Group on August 14, 2025. The report summarised industry perspectives on the G7 reconnection framework, third-party risk management in complex supply chains, and the strategic implications of emerging technologies, such as artificial intelligence and quantum computing. A salient observation was the systemic risk posed by the aggregation of multiple non-critical vulnerabilities in legacy IT estates.
Data (Use and Access) Act 2025 Commenced (Smart Data)
The initial provisions of the Data Use and Access Act 2025 took effect on August 19-20, 2025. This legislation establishes the legal foundation for "smart data" schemes, which aim to provide consumers and small businesses with secure access to their data held by service providers. The Act introduces a 'recognised legitimate interests' lawful basis for data processing in specific contexts and provides more precise legal parameters for the use of personal data in scientific research. The full implementation will be phased through June 2026.
🇭🇰 Hong Kong
Digital Assets: Establishing a Comprehensive Regulatory Framework
Hong Kong's Stablecoins Ordinance took effect on August 125. This legislation formalises a comprehensive licensing regime for issuers of fiat-referenced stablecoins, vesting regulatory and supervisory authority with the Hong Kong Monetary Authority (HKMA).
Digital Assets: Joint Regulatory Intervention on Stablecoin-Related Market Speculation
Following the enactment of the new stablecoin regime, the HKMA issued a public warning regarding fraudulent schemes where entities falsely claim to be licensed or in the process of obtaining a license to issue stablecoins. No further joint interventions were announced in August 2025.
Digital Assets: HKMA Finalises Prudential Framework for Stablecoin Issuers
In August 1825, the HKMA published the finalised prudential framework applicable to licensed stablecoin issuers. This framework operationalises the requirements of the Stablecoins Ordinance, detailing specific rules on capital adequacy, reserve asset composition and custody, redemption rights, and AML/CFT systems and controls.
🇦🇪 United Arab Emirates
Digital Assets & Payments: CBUAE Advances Digital Dirham Initiative for Q4 2025 Launch
The Central Bank of the UAE (CBUAE) continued its development work on the Digital Dirham initiative. The project, part of the CBUAE's broader Financial Infrastructure Transformation Programme, remains on schedule for a projected launch in Q4 2025. This CBDC is a strategic component of the UAE's objective to enhance domestic and cross-border payment efficiency and foster a digital economy.
🇺🇸 United States
Digital Markets and Assets: Regulatory Status
August 2025 marked a significant acceleration of regulatory and policy initiatives in the United States, shifting from a period of analysis to one of active engagement.
Digital Markets: Executive & Inter-Agency Pro-Innovation Agenda. In a move to bolster the US position in the digital economy, the White House announced a cross-agency pro-innovation agenda. Coordinated through the National Economic Council, the initiative directs federal agencies to identify and streamline regulatory pathways for emerging financial technologies, focusing on responsible innovation while ensuring robust consumer protection.
Digital Markets: The President's Working Group Sets a Pro-Growth Agenda. The President's Working Group on Financial Markets (PWG) released a policy statement outlining a pro-growth agenda for U.S. digital markets. The agenda prioritises enhancing market competitiveness, promoting capital formation through digital asset issuance, and ensuring the resilience of financial market infrastructures supporting digital assets.
Digital Assets: "Project Crypto" and "Crypto Sprint" Launched by the SEC and CFTC The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) announced a joint initiative, "Project Crypto," a long-term effort to harmonise data reporting and clarify jurisdictional lines. The initiative was launched with a "Crypto Sprint" to develop a unified rulebook for platforms trading assets that may exhibit characteristics of both securities and commodities.
Digital Markets: Legislative Developments On Capitol Hill, a bipartisan draft bill, the 'Financial Innovation and Technology for the 21st Century Act,' was introduced in the House Financial Services Committee. The proposed legislation aims to establish a comprehensive regulatory framework for digital assets, categorising specific types and assigning primary regulatory authority based on an asset's degree of decentralisation.
Digital Markets: Senate Banking Committee Issues Comprehensive RFI The Senate Committee on Banking, Housing, and Urban Affairs issued a comprehensive Request for Information (RFI) seeking public comment on the state of digital asset markets. The RFI covers stablecoin issuance, custody, decentralised finance (DeFi) protocols, and potential systemic risks, with responses intended to inform future legislative efforts.
Digital Markets: SEC Policy and Market Structure Enhancements. The SEC's Division of Trading and Markets has proposed rule amendments to enhance the market structure for digital assets that are deemed securities. The proposal would expand the definition of an "exchange" to capture specific DeFi protocols and require alternative trading systems (ATSs) for crypto-asset securities to adopt more stringent operational standards.
Digital Assets: SEC Permits In-Kind Creations for Crypto ETP..In a pivotal decision, the SEC issued an order permitting in-kind creations and redemptions for exchange-traded products (ETPs) that hold spot crypto-assets. This is expected to improve efficiency and lower trading costs of these products by allowing authorised participants to exchange a basket of underlying crypto-assets directly for ETP shares.
Digital Assets: SEC Staff Issues Nuanced Statement on Liquid Staking The staff of the SEC's Division of Corporation Finance released a statement providing a nuanced view on liquid staking programs. The statement clarifies that the characterisation of a liquid staking token as a security is a facts-and-circumstances determination, highlighting factors such as the protocol's degree of centralisation and marketing as key considerations.
🌍 International
Digital Assets: BIS Survey Indicates Strong Central Bank Engagement with Digital Currencies
The Bank for International Settlements (BIS) published the results of its 2024 survey on CBDCs and crypto-assets on August 2225. Polling 93 central banks, the survey reveals that 91% are actively engaged in some form of CBDC work. The findings indicate that the exploration of wholesale CBDCs is generally at a more advanced stage than retail projects, with motivations ranging from improving payment system resilience to countering the influence of private digital currencies.
FinCrime: BIS Proposes Novel AML Compliance Framework for Cryptoassets
In August 1325, a BIS bulletin proposed a novel conceptual framework for AML/CFT compliance in the crypto-asset space. The proposal advocates for leveraging the inherent transparency of public blockchains to generate a "compliance score" for crypto-assets. This score, derived from an asset's transactional history, could be used by regulated entities at fiat on/off-ramps to assess and mitigate money laundering risks, complementing traditional, entity-based KYC/CDD obligations.
Digital Markets: IMF Paper Decrypts International Stablecoin Flows
The IMF working paper "Decrypting Crypto: How to Estimate International Stablecoin Flows," published in July 2025, remained a highly relevant analysis for policymakers in August. The paper's novelty lies in its methodological approach, which utilises a combination of AI and machine learning techniques to analyse on-chain data and estimate the geographic distribution of pseudonymous stablecoin transactions. This provides a new tool for macroeconomic surveillance and understanding capital flow dynamics in the digital age.
