Bybit x Block Scholes Crypto Insights Report: Deep dive into US crypto regulations

Key Highlights:

• Just over 151 days of President Trump’s administration have already delivered significant shifts in the US’s crypto policy: Active promotion of a comprehensive regulatory framework for digital assets includes appointing pro-crypto regulators, ending high-profile lawsuits against crypto companies, clarifying rules around staking and fostering ETF approvals.

• Stablecoin regulation via the GENIUS Act and the proposed BITCOIN Act indicates major institutional and governmental acceptance: These acts establish frameworks for the safe issuance of stablecoins, and may potentially lead to significant institutional demand for Bitcoin. Stablecoins could dramatically scale in adoption. More speculative bills, such as the BITCOIN Act, could position the US government among the largest holders of Bitcoin globally.

• Regulatory momentum in the US is influencing global cryptocurrency policy: Since the change of stance in the US, other nations have accelerated their own regulation of crypto assets. This includes South Korea’s relaxing of crypto regulations, Pakistan’s strategic Bitcoin mining initiative, significant EU and UK regulatory milestones and proactive measures across the Middle East.

A crypto president

Many months before President Trump was sworn in as President of the United States for the second time, he made clear his ambitions to turn the US into the “crypto capital of the world.” Since his inauguration in January, there have been a number of ways his new administration has pushed toward this goal.

Trump hosted the White House Digital Assets Summit, the first-ever “crypto summit” in history by a sitting US administration in early March. Ahead of the event, he announced a planned strategic Bitcoin reserve and digital asset stockpile. The US President has also launched his own DeFi project, World Liberty Financial, a US dollar–pegged stablecoin and even his own meme coin. During the Blockworks conference, President Trump delivered a video presentation in which he called on Congress to pass landmark legislation creating simple, commonsense rules for stablecoins.”. Since that presentation, the US Senate has in fact passed the first-ever stablecoin and crypto legislation in the US, setting up the regulatory framework that will govern cryptocurrency stablecoins. 

In this report, we aim to summarize the regulatory and political landscape in the US and quantify some of the potential impacts of the legislation that’s passed through the US government, as well as those that are currently being debated. We then aim to expand that analysis beyond the US and provide a comprehensive overview of regulatory advancements in key regions around the world. 

Crypto capital — regulatory advancements in the US 

Since his inauguration on Jan 20, 2025, Trump’s administration has taken multiple steps toward its goal of establishing the US as the “crypto capital” of the world, including appointing new leadership for the SEC, launching a specialized Crypto Task Force, dismissing high-profile lawsuits against crypto-related firms, clarifying rules on staking and actively advancing crypto ETF approvals. These actions are a turning point in US crypto regulation away from the negative stance of the previous administration.

Changes at the SEC — ending regulation by enforcement

Trump’s first major appointment, setting the tone for the administration's approach, was Paul S. Atkins as the 34th chair of the SEC, sworn into office on Apr 21, 2025. Atkins is a known advocate for deregulation and was former commissioner (2002—2008). In his remarks, he committed to creating “fit-for-purpose rules for digital assets,” signaling a clear shift away from the regulatory posture of the Gensler era and toward a pro-innovation agenda.

Even before Atkins assumed office, Acting Chair Mark T. Uyeda established an SEC Crypto Task Force on Jan 21, 2025, appointing Commissioner Hester M. Peirce as its lead. The group’s goal is to draft a unified registration pathway for crypto-related SEC applications, standardized disclosure rules and harmonized regulation in coordination with the Commodity Futures Trading Commission (CFTC) and the Federal Reserve, replacing the fragmented, case-by-case enforcement approach with a comprehensive crypto rulebook.

Soon after the task force launched, major lawsuits were dropped, as the SEC began clearing longstanding cases. On Feb 27, 2025, the agency jointly dropped its civil lawsuit against Coinbase for failing to register as a securities exchange, broker and clearing agency. In parallel, the case against Consensys for allowing swaps and unregistered staking was also dropped. This was followed on Mar 27, 2025 by the dismissal of a similar lawsuit against San Francisco–based crypto exchange Kraken. All of these cases were dismissed with prejudice, involving no fines or operational changes, underscoring a sharp pivot from litigation toward regulatory engagement.

Spot crypto asset ETF application activity then accelerated, driven by the more favorable regulatory tone. New applications regularly make headlines, covering exposure to tokens such as SOL, XRP, SUI and even meme coins like Dogecoin. Hybrid crypto vehicles are also emerging, including a notable filing by Trump’s Truth Social for a BTC/ETH 3:1 ETF. While these products are still under SEC consideration, their approval would contribute to the US’s standing as a global crypto hub.

SEC: Staking is not a securities transaction

On May 29, 2025, the SEC’s Division of Corporation Finance clarified that staking is not a securities transaction, issuing formal guidance stating that solo and service-based proof-of-stake activities do not count as securities transactions, provided that no contractual profit rights are involved. The clarification, championed by Commissioner Peirce, applies to both custodial and noncustodial models, resolving a major uncertainty for staking providers. As a result, regulated products quickly began to adjust. For example, the Cboe BZX Exchange, which had previously filed for a standard Franklin Templeton Spot ETF filing, amended its SEC filing to include staking of its ETH holdings. This application has been delayed, in line with other staked ETF applications, as the SEC needs more time to decide. 

The immediate impact this clarity has had on holders of ETH is clear. Staked ETH is held within the Beacon Chain, a key aspect of the Ethereum network’s security. Per the graph below, the number of staked ETH tokens held in the Beacon Chain has skyrocketed since the May 29 announcement. 

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Figure 1. Number of Ether tokens staked on the Beacon Chain, with the SEC’s staking announcement marked with a white dotted line on May 29, 2025. Sources: Infura, Block Scholes

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ETH Staking ETFs would likely revolutionize investment in the ETH token for institutional investors, since it would provide a regulated investment vehicle that also offers a crypto-native yield, a key factor in distinguishing it from BTC Spot ETFs. This would make investment much more attractive for an asset that has (apparently) thus far lacked a narrative to attract the same institutional attention as BTC. However, if the US is to champion and embrace staking, allowing ETH Spot ETFs to pass a token-native yield onto investors, how will the Ethereum network cope with the additional demand? And for token holders, is this a bullish signal?

We covered the limitations of staking ETH on the network in a previous report on the recent Pectra upgrade, in which we discussed how it was being implemented to address the strain that increasing numbers of validators have been placing on the Ethereum network. An added load to the network from staked ETH Spot ETFs could create further pressure by requiring more validators to join the network at the maximum 2,048 ETH threshold, potentially once again testing the limits of Ethereum’s bandwidth.

However, a more important consideration is that of centralization. Large ETFs that hold pooled investor stakes would be responsible for allocating ETH to validators, meaning these entities and their delegates would carry significant influence in the validation and consensus processes, due to their stake-based voting weight. Additionally, as many of these investment vehicles are US-based, the entities involved would also need to comply with local and governmental regulations. While this could add weight to the US’s claim of being the “crypto capital,” the possible centralization may pose a concern to Ethereum’s decentralized network.

An increase in staked ETH will also impact Ethereum’s dynamics, influencing staking yields, the balance between inflationary and deflationary issuance of ETH tokens and the available circulating supply. At present, approximately 29% of all ETH is staked. If, in the future, this figure grows by the emergence of staked ETH Spot ETFs, each validator's reward would decrease in inverse proportion to the square root of staked ETH: 

staking yield ∝ 1/√(staked ETH)

As more ETH is staked, the daily ETH issuance grows correspondingly:

ETH issuance ∝ √(staked ETH)

While ETH's burn rate is determined by the level of daily activity on its blockchain, it’s unrelated to the amount staked. This dynamic leads to two potential scenarios: if network activity rises alongside staking, then ETH’s overall supply could remain constant or become deflationary — a bullish signal. However, if demand on the ETH network fails to grow enough to offset the rise in issuance, the ETH supply would shift into an inflationary state.

The SEC’s decision is a win for other proof of stake (PoS) blockchains, too, and especially for the native tokens that secure them. This uptick in staking activity isn't ETH-specific, as other PoS blockchains, such as Solana and Sui, should also benefit following the same logic. However, unlike ETH, which has an existing ETH Spot ETF, SOL and SUI Spot ETFs are still under review, waiting for an approval outcome from the SEC. Therefore, the demand for SOL and SUI through a regulated channel such as an ETF remains unclear. 

This lack of immediate benefit for other chains is reflected in their spot prices: whereas ETH has seen a stabilization of its price following the SEC’s May 29, 2025 SEC announcement, spot prices for the SOL and SUI tokens show no notable outperformance.

Figure 2. Normalized token performance before and after the SEC’s staking announcement on May 29, 2025. Sources: CoinGecko, Block Scholes

The GENIUS Act — legislating for stablecoins

The Guiding and Establishing National Innovation for the US Stablecoins Act of 2025 was passed by the US Senate in mid-June in a 68–30 vote. It’s a landmark bill, given that it’s the first to establish guardrails on US dollar–pegged stablecoins and their issuers. The bill is more commonly known as the GENIUS Act, the name of the bill in the US Senate; its equivalent counterpart in the US House of Representatives is the STABLE Act — the Stablecoin Transparency and Accountability for a Better Ledger Economy Act of 2025, which, unlike GENIUS, hasn’t yet passed as legislation. 

To better understand the GENIUS Act, it helps to take a step back and understand what stablecoins are and how they’ve been regulated (or not) since their inception. The GENIUS Act defines a stablecoin as a “digital asset that is or is designed to be used as a means of payment or settlement, and the issuer of which is obligated to convert, redeem or repurchase for a mixed monetary value”. By market capitalization, the largest and most well-known stablecoins include Tether’s USDT token and Circle’s USDC token — both stablecoins that peg their value to the US dollar. Prior to the GENIUS Act, there was no comprehensive federal regulatory framework for such stablecoins, despite their being a nearly $250B market cap industry. Instead, stablecoin issuers were regulated by general money transmitter laws that varied, based upon jurisdiction. 

The legislation requires “permitted payment stablecoin issuers” to “maintain reserves backing the issuer’s payment stablecoins outstanding on an at least 1 to 1 basis” — stipulating that eligible assets include “United States coins and currency,” bank deposits, deposits held at a Federal Reserve bank, “Treasury bills, notes or bonds with a remaining maturity of 93 days or less,” certain repurchase agreements backed by US treasuries, or money market funds that are invested in Treasuries. It’s left to the issuer to decide how to allocate their reserves in each of the eligible securities.

Stablecoin issuers will be required to publish a “monthly composition” of their reserves on their website, disclosing “the total number of outstanding payment stablecoins issued by the issuer” and the subsequent “amount and composition” of reserves backing that issuance — something most stablecoin providers already do. These reports would also need to be examined by a registered, independent public accounting firm, with the issuer’s CEO and CFO required to attest to their accuracy.

Supervisory responsibility is divided between federal and state regulators. Stablecoin issuers that are subsidiaries of depository institutions (such as banks) will have the Office of the Comptroller of the Currency (OCC) as their primary federal regulator. A stablecoin issuer with a token that has a total market capitalization of less than $10B “may opt for regulation under a State-level regulatory regime,” though a “transition mechanism” exists to handle instances when the issuer's market cap exceeds the threshold. Importantly, nonbank entities may also be approved to issue stablecoins, and will be “supervised exclusively” by the OCC. 

Notably, both bills prohibit interest- or yield-bearing stablecoins. The GENIUS Act specifically excludes a token that earns interest from the definition of a stablecoin — meaning that any such token is beyond the perimeter of the Act. Finally, the GENIUS and STABLE Acts establish landmark developments around consumer protection. Under the Senate bill, “the claim of a person holding payment stablecoins issued by the payment stablecoin issuer shall have priority over all other claims against the payment stablecoin issuer,” meaning that holders would be paid out first in the case of an insolvency. Under current law, holders are not guaranteed repayment.

According to CoinGecko, the total size of the stablecoin market is approximately $245 billion. More than half of that number is contributed by Tether’s USDT token, which has a market capitalization of $155B. The chart below plots the market capitalization of the five largest stablecoins against the total crypto market capitalization, excluding stablecoins. In general, the two have moved parallel to each other. Just this year alone, stablecoin market capitalization is already up 22%. 

Figure 3. Total market capitalization of stablecoins (blue) and non-stablecoin crypto assets (red) on a log scale. Sources: CoinGecko, Block Scholes

Interestingly, many cycle peaks and troughs for BTC have coincided with a bottoming and top in stablecoin supply. The 2020–21 crypto bull run was characterized by a “twin top” in BTC — the first occurred in April 2021, and the second in November 2021. The circulating supply of stablecoins peaked shortly afterward before falling during the subsequent bear market, only to recover in late 2024.

How much can the stablecoin supply grow in this cycle? When we look at the total US money supply as described by M2 — the Federal Reserve’s broad money supply that aggregates the total amount of US dollars in circulation, checking accounts, savings deposits, small time deposits and in retail money-market mutual funds — we find that the addressable market for digital-asset stablecoins is enormous. In fact, the total stablecoin supply doesn’t even register on this chart (below).

Figure 4. Total market capitalization of stablecoins (blue) and M2 money supply for the US dollar (red). Sources: Block Scholes, CoinGecko, FRED

Instead, we can look at how the ratio of stablecoin market cap and M2 has evolved over time. Currently, the market capitalization of US dollar–pegged stablecoins is equal in size to only 1% of the M2 money supply. That ratio increased almost exponentially between 2020 and 2021, when M2 money supply surged from $15T to nearly $22T and the US dollar–pegged stablecoin market cap surged from $5B to $142B.

Figure 5. Ratio of total market capitalization of stablecoins to M2 money supply for the US dollar. Sources: Block Scholes, CoinGecko, FRED

Secretary of the Treasury Scott Bessent recently told the US Senate that the GENIUS Act and stablecoin legislation would be crucial in maintaining the dominance of the US dollar as a reserve currency: 

“I believe that stablecoin legislation backed by US treasuries or T-bills will create a market that will expand US dollar usage via these stablecoins all around the world. I think that $2 trillion is a very reasonable number.”

That suggests a nearly 10x increase from current levels, which, if M2 levels remain constant, would mean that stablecoins would be equal in size to 10% of the total US money supply. 

The BITCOIN Act — paving the way for a strategic reserve of digital assets

Another major bill that has been introduced into the US Senate and the House, though it has yet to be passed in either chamber, is Senator Cynthia Lummis’s BITCOIN Act. The bill directs the US Treasury to buy and hold 1,000,000 bitcoins over five years — using the bitcoins to form a strategic Bitcoin reserve. According to Lummis, if the bitcoins are held for 20 years, as directed by the bill, it could “reduce our [US] national debt by half.”

While President Trump has already passed an executive order to create such a reserve, the current order specifically states that the “United States Government shall not acquire additional Stockpile Assets other than in connection with criminal or civil asset forfeiture proceedings … without further executive or legislative action.” Senator Lummis’s bill, if passed, would act as a form of legislative action that could help extend the current strategic reserve. 

How can we put that size and pace of bitcoin acquisition into context? If the bill is to become legislation, assuming an even purchase rate over the next five years, the bill would instruct the US government to purchase 200,000 bitcoins per year. That amounts to approximately 550 bitcoins per day purchased by the US government alone. At a current spot price of $103K, that’s equivalent to $57M. To put this figure into context, Bitcoin’s daily trading volume is around $35B — that is, the US government would be purchasing an amount of Bitcoin equivalent to 0.16% of the asset’s total trade volume on a daily basis. 

A stockpile of 1 million bitcoins would also make the US government a larger holder of the asset than Strategy (assuming Saylor’s company makes no more BTC purchases). Strategy is currently the largest holder of Bitcoin among any publicly traded company’s holdings, and currently possesses 592,100 bitcoins, equivalent to 2.82% of the total 21 million fixed supply. The US government would also be on par with Bitcoin’s pseudonymous creator, Satoshi Nakamoto, who, according to some sources, holds 968,452 bitcoins. 

Assuming the Bitcoin purchases begin from 2026, the US government would consistently outpace the natural Bitcoin daily supply — which is currently 450 bitcoins mined by proof of work (PoW) miners. Following the expected path of the next projected Bitcoin halving in March 2028, by 2029 the US government would be purchasing more than half of the total number of bitcoins mined by validators on the Bitcoin network each day.

Figure 6. Projected number of new bitcoins mined per year (green) accounting for a halving event in 2028, with demand from the US government as a result of the potential passage of the BITCOIN act. Source: Block Scholes

New Hampshire — HB 302

Senator Lummis’s bill has also had a considerable impact on state-specific legislation in the US. Back in May 2025, New Hampshire became the first state to pass a bill that establishes a state crypto reserve. It was signed into passage by Governor Kelly Ayotte on May 6, 2025, and will take effect from Jul 5, 2025. The bill, entitled HB 302, permits New Hampshire’s State Treasury to invest as much as 5% of the state’s public funds into “precious metal” and “any digital assets with a market capitalization of over $500B averaged over the previous calendar year.” Based on that definition, only Bitcoin would be considered an eligible digital asset. The digital assets would be held using a “secure custody solution” or “in the form of an exchange-traded product.” 

According to the bill, public funds eligible for the purchases include “the general fund, the revenue stabilization fund, and any other funds as authorized by the legislature”. Taking just the former two funds as a lower bound — considering that the general fund of New Hampshire is worth approximately $2.107 billion, and the rainy day fund (otherwise known as the revenue stabilization fund) is worth approximately $160 million — a 5% allocation would amount to $113M, which could be allocated by the state toward Bitcoin. The Treasurer could deploy the full 5% in a single trade, or build the position incrementally, given that the bill is silent on any timing or frequency, and only caps purchases at 5% of the funds’ total size. A $113M purchase in a single day would amount to around a third of a percent of total daily BTC trade volume. 

Arizona — Bill 2749

Arizona has followed in the path of New Hampshire, becoming the second state in the US to create a strategic Bitcoin reserve, although Bill 2749, signed into law by Governor Katie Hobbs, is slightly more conservative. It allows Arizona to claim ownership of abandoned digital assets if the owner fails to respond to communications within three years. Those seized assets would then form a Bitcoin and digital asset reserve fund. The state’s custodians would also be permitted to grow the value of that fund from staking rewards or by receiving airdrops. Unlike New Hampshire’s bill, Arizona’s Bitcoin bill would require no taxpayer funds. Arizona’s Governor did, however, veto a Bitcoin reserve bill similar to New Hampshire’s: Senate Bill 1373 sought to establish a digital assets strategic reserve fund, authorizing Arizona’s treasurer to allocate up to 10% of the state’s Budget Stabilization Fund into digital assets. Hobbs also vetoed Senate Bill SB 1025, which would have authorized a larger number of public funds in Arizona, including the State Treasurer and retirement funds to allocate up to 10% of their funds into digital assets, with a specific focus on Bitcoin.

Spot ETF flows

Considering that some of the bills currently in legislation would allow for state treasurers to purchase Bitcoin directly through Spot Bitcoin ETFs, it’s worth understanding what impact, if any, President Trump’s “crypto friendly” administration has had on ETF inflows. Since his reelection on November 5, 2024, the 7-day moving average of ETF flows has seen larger spikes up (and down) relative to before his victory. Below, the chart shows the rolling 7-day average of ETF flows.

The 7-day average reached its highest one week after the election date, when spot ETFs were averaging over $3B of inflows. We found that the 7-day average dropped to its lowest levels on record during late February-early March, when Trump’s first onslaught of tariffs began. This suggests that, while net inflows have increased in amplitude, Spot Bitcoin ETFs may also be reacting more sensitively to macroeconomic developments under the new administration.

Figure 7. Bitcoins held by eleven US Spot ETFs (white, right-hand axis) alongside the rolling 7-day average of net US dollar inflows to US Spot BTC ETFs (orange, left-hand axis), with the US election marked with a dotted white line on Nov 5, 2024. Sources: Block Scholes, Bloomberg, Farside Investors

More interestingly, Trump’s crypto-friendly administration had an even stronger (and more notable) reaction for Spot Ethereum ETFs. We reported earlier that Layer 1 blockchains (such as Ethereum and Solana) that support ecosystems of decentralized finance (DeFi) protocols stand to gain the most from a Trump victory. Indeed, the amount of ETH held by Spot ETH ETFs has increased by over 1.5 million since Nov 5, 2024, while the average ETF inflow over the past 7 days post-Trump’s victory has been over $100M higher than the peak before the election results. Both are a clear indication that Spot ETH ETF products, the only altcoin ETF products currently trading, were bolstered by the regime shift toward friendlier regulation. 

Figure 8. Ether tokens held by nine US Spot ETFs (white, right-hand axis), alongside the rolling 7-day average of net US dollar inflows to US Spot ETH ETFs (purple, left-hand axis), with the US election marked with a dotted white line on Nov 5, 2024. Sources: Block Scholes, Bloomberg, Farside Investors

That disproportionate benefit for Ethereum Spot ETFs is best shown in the chart below. While Bitcoin Spot ETFs had already been steadily accumulating bitcoins under management since their inception (and before the US election), Ethereum Spot ETFs actually saw a decline in AUM in the period of inception to pre-election. That changed almost instantaneously from November. Since that date, Ethereum Spot ETFs have increased the number of Ether held from 2.5M to over 4M — compared to an increase of 200,000 in the number of bitcoins over the same period. 

Figure 9. Bitcoins held by eleven US spot ETFs (orange, left-hand axis) and Ether tokens held by nine US spot ETFs (purple, right-hand axis), with the US election marked with a dotted white line on Nov 5, 2024. Sources: Block Scholes, Bloomberg, Farside Investors

The CLARITY Act

On May 29, 2025, along with eight other sponsors, US Representative French Hill of Arkansas introduced the Digital Asset Market Clarity Act (CLARITY Act). According to one of the bill’s sponsors, Congressman Dusty Johnson of South Dakota, the CLARITY Act will “establish clear rules of the road for digital asset regulation, giving certainty to developers and consumers,” It would establish a foundational framework for regulating digital assets, confirming under which scenario digital assets would be subject to the jurisdiction of the CFTC and the Securities and Exchange Commission (SEC). 

The bill has so far passed the House Agricultural Committee (that oversees the CFTC) through a bipartisan vote of 47–6, as well as the House Financial Services Committee, again by a bipartisan vote of 32–19. 

According to the CLARITY ACT’s definitions, there are three distinct categories that digital assets may belong to:

1. Securities
2. Commodities
3. Stablecoins

The Act delineates that the CFTC has primary jurisdiction over digital commodities — a digital commodity being defined as “a digital asset that is intrinsically linked to a blockchain system, and the value of which is derived from or is reasonably expected to be derived from the use of the blockchain system” and spot markets, while the SEC retains authority over digital assets classified as securities.

To operate legally under the CLARITY Act, “[A]ny person acting as a digital commodity exchange, broker or dealer” must file a statement of provisional registration with the CFTC within 180 days of the bill being enacted. The CTFC will then have exclusive jurisdiction over those actors, except in the case of already SEC-registered exchanges, brokers and dealers. The SEC will retain jurisdiction over digital assets classified as securities, and together the SEC and CFTC would share regulatory oversight on “permitted payment stablecoins.”

In addition, the CLARITY provides clear rules to protect consumers, and extends the framework of the GENIUS Act. In the case of the GENIUS Act, holders of a stablecoin have priority over all other claims in the case of an insolvency — whereas under the CLARITY Act, should a digital commodity exchange go bankrupt, assets held on behalf of customers cannot be used to pay out shareholders or debtors, and must be categorized separately to protect consumers.

The CLARITY Act carves out specific protections for DeFi developers and users. It explicitly states that those who engage in common development activities — such as miners, node operators, oracle providers, developers, AMM liquidity-pool participants and makers of self-custody wallets — will be exempt from the registration requirements of the act. 

Historically, US regulators have taken a broad view as to what participation means in the digital financial system. The CLARITY Act is designed to make it explicit that participants such as validators, or node operators are to be distinct from market-facing players such as exchanges or brokers. This, along with clarity from staking activities with the SEC (see the previous section, above) should benefit a slew of PoS blockchain networks, as well as other DeFi protocols and applications. 

Finally, the CLARITY Act removes a major accounting roadblock for traditional institutions that retain custody or would like to retain custody for digital assets. Regulators such as the SEC may no longer require institutions like banks, brokers and dealers to include customer assets they hold in custody as a liability on their balance sheets. They also won’t be required “to hold regulatory capital against assets, including reserves backing such assets, in custody or safekeeping, except as necessary to mitigate against operational risks inherent with the custody or safekeeping services” — that is, the Act officially overturns the SEC’s controversial Staff Accounting Bulletin (SAB) 121, which restricted many banks from crypto custodian roles due to stringent capital requirements.

A crypto world — regulatory advancements outside the US

President Trump’s aim to make the US the “crypto capital of the world” has had an undeniable effect on the global acceptance and adoption of digital assets. For example, on multiple occasions, Trump has extended his so-called “cold war” on China beyond just trade, making remarks such as, “We are leading China in crypto.” That in turn has created a movement from other major geopolitical regions to at least begin to consider some crypto legislation, so as not to be left behind.

While not all of the legislative moves around the world toward further crypto adoption have come following Trump’s return to office, some nations have cited their entry into the digital assets ecosystem as one that was at least partly influenced by the US. The head of the Pakistan Crypto Council, Bilal Bin Saqib, who unveiled the country’s plans for a government-led Bitcoin strategic reserve, said “we want to thank the United States of America again because we were inspired by them." In this section, we provide a brief overview of some important developments in the regulatory landscape in a number of regions outside of the US since the election on Nov 5, 2024.

South Korea 

Asia is one region in particular that has emerged as a leader in cryptocurrency adoption, and many major regulatory developments by Southeast Asian nations have been covered previously. However, in early June 2025, the people of South Korea voted in the Democratic Party of Korea, a liberal political party in that country.

With that vote comes a crypto friendly president, Lee Jae-myung, who pledged in his campaign to “legalize and promote” cryptocurrency as well as “establish a won-backed stablecoin market to prevent national wealth from leaking overseas.” Wasting little time, his party recently introduced the Digital Asset Basic Act (DABA) to the National Assembly – the legislative body of the Republic of Korea which enacts laws, though it has not passed yet. The legislation is designed to greenlight nonbank institutions and payment providers in order to issue won-based stablecoins, and to relax regulation on crypto exchanges, granting them more flexibility over the tokens listed on their exchanges.

The legislation’s framework proposes that the Bank of Korea (BOK) would not have the authority to approve stablecoin issuers — instead, the authority would be given to the Financial Services Commission (FSC). A stablecoin issuer would be provided a license to issue stablecoins, should they meet the equity capital requirement of 500M won ($365K). Issuers are also mandated to establish and clearly communicate policies for users on how to redeem their stablecoins for the underlying reserve assets or fiat currency, and there will be strict standards as to what assets qualify as suitable reserves. The bill, however, has received some backlash for taking power away from the country’s central bank. 

Even more recently, the Democratic Party of Korea introduced a complementary companion bill entitled the Digital Asset Innovation Growth Act (DAIGA), which is designed to amend the as yet unpassed DABA. Under this legislation, the minimum capital requirement for a stablecoin issuer is two times as large — meaning that issuers would need at least 1B won ($720K). The new legislation also addresses the concerns of the BOK. Supervision of stablecoin issuers will still fall to the FSC; however, the FSC is obliged to consult the BOK on all won stablecoin applications. It also allows the Bank of Korea to ask for stablecoin data from the issuer at any time, and to request that the FSC perform an inspection. 

President Lee Jae-myung is also making progress on his campaign promise to allow the issuance, listing and trading of spot ETFs with Bitcoin and other underlying assets. According to local news, the Financial Services Commission (FSC) has filed a road map with the Korean government regarding its plans to prepare measures to help support the introduction of virtual asset spot ETFs in the second half of the year. 

Positive crypto developments in South Korea stand out in particular, due to the country’s previous harsh stance on digital assets. In 2017, the FSC banned all forms of crypto-based fundraising, a move that mirrored China’s ban on initial coin offerings (ICOs). In January 2024, the FSC proposed a ban on using credit cards to purchase crypto assets and, separately, the commission also currently has a domestic ban on crypto ETFs. 

Pakistan

In May 2025, during the Bitcoin 2025 conference in Las Vegas, Pakistan announced plans to establish a government-led Bitcoin strategic reserve, which would make it one of the first countries in the region to do so. The announcement was accompanied by the unveiling of the Pakistan Digital Assets Authority (PDAA), a body formed under the ministry of Finance, tasked with regulating crypto platforms and licensing digital assets service providers. In addition, the Pakistan Crypto Council (PCC) (a government-backed body) has committed 2,000 megawatts (MW) of energy to Bitcoin and data centers for AI compute power.

We can estimate the impact of such an addition to the Bitcoin network, using some simple assumptions of the efficiency of the equipment that would be used to mine. First, we assume that the relevant government agency of Pakistan has access to moderately new and efficient ASICs (the specialized hardware used to compute the hashes required for Bitcoin mining).

ASICs that can produce more than 200TH/s (200 trillion hashes computed per second) average an efficiency of around 18 Joules per Terahash. Under the more conservative assumption that they’re able to obtain a fleet of mining hardware that averages 20 J/TH, a power draw of 2,000 megawatts (MW) (or 2 billion Joules per second) can be converted into 100 exahashes per second. That's just under 10% of the current total network hashrate combined.

Figure 10. Distribution of ASIC miner efficiency across machines yielding more than 200TH/s. Sources: Block Scholes, ASIC Miner Value

From the proportion of hashrate contributed, a rough estimate of the number of bitcoins mined per year will be close to 9% of the total bitcoins mined by the whole network — a staggering 14.8K bitcoins per year. Even a conservative estimate of half of that energy committed (1000 MW) to Bitcoin mining (and not data centers) would yield more than 7K bitcoins per year.

Figure 11. Estimated total hashrate on the Bitcoin network (log scale). Sources: Block Scholes, Blockchain.com

However, the International Monetary Fund (IMF) has raised concerns about the legality of cryptocurrency mining in Pakistan, as well as the potential impact on power tariffs and resource distribution. The IMF has highlighted that the feasibility of this initiative, which raises the country’s regulatory framework for cryptocurrency activities, remains unclear. This elevates risks around ensuring fair energy allocation amid ongoing power shortages and fiscal pressures. The IMF’s caution highlights Pakistan’s struggle to balance digital innovation with energy and fiscal stability.

Europe

The European Union (EU) region has emerged as a significant regulatory front-runner for crypto legislation via its implementation of the Markets in Crypto-Assets Regulation (MiCA). By establishing a single rulebook across all 27 member states, it tackles key challenges of cross-border compliance, regulatory arbitrage and consumer risk.

A significant milestone was reached on Jun 30, 2024, when MiCA’s Titles III and IV came into effect. These provisions focus specifically on asset-referenced tokens (ARTs) and e-money tokens (EMTs) — token types that can have systemic implications, due to their link to fiat or other assets. From that date on, issuers of ARTs and EMTs have been required to obtain authorization from the national competent authority (NCA) and to publish a white paper disclosing key information about the token’s structure, governance, rights and risks.

Another major milestone followed on Dec 30, 2024, when the passporting regimen for crypto asset service providers (CASPs) became operational. This allows authorized firms to provide services across the EU under a single incense, reducing compliance burdens and creating a more integrated European crypto market.

The UK has also made advancements on crypto legislation — in late April 2025, HM Treasury published a draft of The Financial Services and Markets Act 2000 (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025. Currently, crypto exchanges and custodian wallet providers are required to register with the Financial Conduct Authority (FCA). However, they only need to comply with basic laws of money laundering and “Transfer of Funds” regulations. This excludes broader regulatory requirements, like those under the Financial Services and Markets Act (FSMA), which traditional asset exchanges (such as equity exchanges) are required to follow. As a result, crypto exchanges and firms can operate more high-risk models without the regulatory supervision that traditional financial service companies are required to follow. 

The scope of the FSMA only covers crypto assets that qualify under UK law as “specified investments.” This definition excludes a slew of the most well-known cryptocurrencies (e.g., Bitcoin and Ethereum). Therefore, trading platforms dealing in these assets for this reason are also able to operate without certain regulatory safeguards.

The draft order introduces more specific categories of specified investments that will bring cryptoassets within FSMA’s regulatory control. Qualifying assets that fit this category must be cryptographically secured, fungible and transferable (for example, stablecoins are also a subtype of qualifying crypto assets). 

In late May, the UK’s Financial Conduct Authority (FCA) also sent out a press release seeking advice on stablecoin legislation. In that release, the FCA stated that it will add a “specific focus on stablecoins to its innovation services in the coming months,” and that it will work more closely with the Bank of England in order to ensure a clear pathway for the regulation of stablecoins. Some proposals from the FCA include requiring firms providing crypto custody services, who have responsibility for keeping consumers’ crypto safe, to ensure that client  funds are effectively secured and can be easily accessed at any time. 

Emulating campaign moves from President Trump, Nigel Farage, the leader of the Reform party in the UK, has promised to pass crypto-friendly legislation and establish a Bitcoin reserve at the Bank of England, should his party come into government following the next UK election. Farage’s party has proposed the Cryptoassets and Digital Finance Bill, which prohibits banks from “debanking” customers purely for interacting with crypto tokens; lowers the current 18%–24% capital gains tax on crypto to 10%: and allows consumers to pay taxes in cryptocurrency. Unlike Senator Lummis’s BITCOIN Act, Farage’s crypto bill specifies neither how the proposed Bitcoin reserve would be funded, nor any target amount of bitcoins to be purchased. Given the government’s strong majority in parliament, Farage’s party is unlikely to increase its power in parliament earlier than the next general election, which is currently scheduled for 2029.

Middle East

In 2024, the United Arab Emirates took significant steps toward digital asset regulation. One of these milestones was that Dubai's Virtual Assets Regulatory Authority (VARA) issued an updated and comprehensive rulebook that sets prudential, market abuse and marketing standards for all virtual asset service providers in the country. This framework brings structure and clarity to a wide range of activities, including exchange operations, custody, brokerage and advisory services.

At the same time, the emirate of Ras Al Khaimah launched the Digital Assets Oasis (RAK DAO) — a free zone that’s fully dedicated to digital assets companies. Established in October 2023, it offers a regulatory environment tailored to web3-native business models, with several benefits included, such as 100% foreign ownership, zero corporate tax, full profit repatriation and regulatory guidance.

Saudi Arabia has adopted a more cautious regulatory stance on crypto, with financial institutions being banned from offering digital assets services in the country. But the starting point of the adoption is accelerating rapidly, and the kingdom is now the second-largest and fastest-growing crypto market in the region, driven by the interest of a young population.

However, some regulations are focusing on infrastructure. The Saudi Arabian Monetary Authority (SAMA) is actively involved in the promotion of blockchain adoption and innovation, and global financial players, such as Goldman Sachs and Rothschild, are currently exploring the launch of tokenization projects as part of their digital asset platforms in Saudi Arabia.