For years, crypto sold itself as an escape route: money without banks, finance without gatekeepers, markets without borders. It was exciting, occasionally brilliant, and often chaotic. But the “wild west” phase is ending — not because regulators suddenly understand blockchains, but because they understand something more important: rules create markets, and markets without credible rules don’t scale.
What’s happening now isn’t a tidy “consumer protection” clean-up. It’s a structural shift in who gets to operate, who gets distribution, and who gets to call their product “money” in anything but marketing. Regulation is doing what regulation always does: drawing a perimeter, setting standards, and quietly picking winners.
Key takeaway: the next crypto cycle won’t be won by the loudest projects — it’ll be won by the firms that can survive inside the regulatory perimeter.
What’s changing (and why it matters more than most people think)
1) The UK: promotions, permissions, and a tightening perimeter
The UK’s direction of travel is clear: if you want UK consumers, you need to play by UK rules — even if you’re based overseas. The FCA has been explicit that the financial promotions regime applies to firms marketing cryptoassets to UK consumers, regardless of where the firm is located (FCA).
And it’s not just policy statements. The FCA has also published detailed expectations for how cryptoasset promotions should be communicated and approved — including risk warnings, appropriateness, and how “fair, clear and not misleading” is interpreted in practice (FCA).
One of the most underappreciated points is enforcement leverage. If an unregistered cryptoasset firm communicates financial promotions unlawfully, the FCA makes clear that can constitute a criminal offence. The message is blunt: distribution is a regulated privilege (FCA).
2) The EU: MiCA and the “passportable” future
The EU’s Markets in Crypto-Assets Regulation (MiCA) is the biggest single harmonisation move crypto has seen in a major economic bloc. It creates a framework covering crypto-assets and crypto-asset service providers across the EU (EUR-Lex).
Even if you don’t operate in the EU, MiCA matters because it changes expectations globally. Large platforms, banks, and institutional clients don’t want one set of controls for Europe and another for everyone else. They want a single operating model. MiCA becomes the template that procurement teams, compliance departments, and partners reference — whether or not your jurisdiction has copied it (yet).
3) Global standards: AML, the “Travel Rule”, custody, and market integrity
Crypto is borderless; enforcement isn’t. That’s why global standard-setters matter. When the Financial Action Task Force (FATF) updates guidance on virtual assets and VASPs, it effectively tells countries what “good” looks like on anti-money laundering and counter-terrorist financing controls — including the Travel Rule expectations (FATF).
At the same time, financial stability and market integrity bodies are pushing for consistent oversight: the Financial Stability Board (FSB) has published high-level recommendations for regulation, supervision, and oversight of crypto-asset activities and markets (FSB), while IOSCO has issued a set of policy recommendations aimed at market integrity and investor protection across crypto and digital asset markets (IOSCO).
Put simply: crypto is being forced to grow up. And adulthood comes with compliance costs.
The real reason regulators are moving now
If you think this wave of regulation is mainly about protecting retail investors from themselves, you’re missing the deeper incentive. Consumer harm is politically useful — but it’s not the only driver.
Systemic risk: stablecoins and the “money” question
Stablecoins are the hinge point. When stablecoins are mainly used as plumbing for trading, regulators can treat them as a niche problem. When stablecoins become widely used for payments, they become a monetary and financial stability issue.
The Bank of England has been working openly on what a regulatory regime for systemic payment systems using stablecoins could look like (Bank of England) and has since moved into consultation on proposals for sterling-denominated systemic stablecoins (Bank of England).
Meanwhile, the BIS has been blunt about stablecoins as money — noting they fare poorly on key attributes like singleness and elasticity, and raising concerns about integrity. This isn’t a niche academic debate. It’s central banks telling you what they will and won’t allow to become “money” at scale (BIS).
Financial crime, reputational risk, and the “permissioned future”
Another driver is reputational risk. Governments don’t like being embarrassed. Banks don’t like being exposed. The history of financial regulation is, in part, the history of institutions protecting their licence to operate.
That’s why FATF guidance matters. If a jurisdiction is seen as weak on AML/CFT for virtual assets, it invites pressure. And if a platform is seen as weak on controls, it invites de-banking, payment rail restrictions, and partner refusal. You can call that unfair. You can also call it reality.
Consumer harm narratives are politically powerful — and strategically convenient
Retail harm is the public story. But it also provides the justification for the private work: bringing crypto inside the perimeter, forcing intermediaries to behave like financial institutions, and making it harder to operate anonymously at scale.
In the UK, HM Treasury has published draft legislation and policy notes for a regulatory regime for cryptoassets (regulated activities), signalling the intent to proceed broadly in line with prior proposals (HM Treasury).
That’s not a crackdown. That’s assimilation.
Winners & losers
Who benefits
- Well-capitalised exchanges and brokers that can afford licensing, governance, audits, and compliance teams.
- Custodians and safeguarding specialists — as custody standards tighten, “trust me” stops being a business model.
- Banks and payment firms that can offer fiat ramps and stablecoin infrastructure under supervision.
- RegTech and compliance tooling that helps platforms meet monitoring, reporting, and Travel Rule expectations.
- Serious fintech operators who treat compliance as a product feature, not a tax.
Who loses
- Thinly capitalised exchanges that live on marketing and leverage rather than trust and controls.
- Offshore operators relying on regulatory ambiguity while targeting major consumer markets.
- High-yield “products” that can’t survive basic scrutiny on risk, disclosures, and conduct.
- Projects built on anonymity as a selling point — because anonymity doesn’t scale in a regulated payments and investment world.
Who gets squeezed (and why that’s the point)
The squeezed group is the one few people talk about: genuine startups. The compliance bar is rising, and early-stage teams will struggle with the cost of legal advice, licensing strategy, and operational controls.
That isn’t an accident. Regulation often results in consolidation. If you want a market dominated by fewer, more controllable players, you raise the fixed costs of participation. That’s how “mature markets” are built — and it’s also how competition gets quietly reduced.
What founders and operators should do (without pretending this is easy)
Make compliance part of the product
In the next phase, compliance isn’t a box to tick. It’s a differentiator. Your governance, disclosure quality, conflict management, custody model, and operational resilience will matter. IOSCO’s recommendations are a useful lens here because they focus on market integrity outcomes rather than crypto tribal arguments (IOSCO).
Choose jurisdictions deliberately — and assume you’ll be judged by the strictest one
If you want institutional adoption, you’ll often be judged against the strictest framework your partners care about. For many global firms, that’s increasingly the EU’s MiCA framework (EUR-Lex) and the UK’s promotions and perimeter approach (FCA).
Build for evidence, not vibes
The era of “we’re decentralised, therefore we’re safe” is fading. Supervisors and partners want evidence: disclosures, controls, audit trails, safeguarding arrangements, clear complaints handling, and demonstrable financial crime controls aligned with FATF expectations (FATF).
Understand the distribution bottleneck
Here’s the part many teams underestimate: you can build the best product in the world and still lose if you can’t market it legally. In the UK, the FCA has made the promotions perimeter explicit and has published detailed rules and guidance on the subject (FCA). If your growth strategy depends on influencers, affiliates, and aggressive paid acquisition, you’re going to need a much more disciplined approach.
Counterarguments and risks (because nothing here is cost-free)
“Overregulation will push innovation offshore”
Yes, some innovation will move. But the uncomfortable truth is that mainstream adoption tends to follow regulated rails. Retail and institutional capital prefer environments where failures are contained and recourse exists. The FSB’s work makes it clear the objective is consistent oversight that still allows “safe innovation” — but within a framework (FSB).
“Regulatory arbitrage will continue”
It will. Crypto is global, enforcement is uneven, and bad actors will always shop for weak jurisdictions. But the direction is towards interoperability of standards. FATF sets expectations on financial crime controls; IOSCO sets expectations on market integrity; and major blocs set hard rules that big firms align to. That doesn’t eliminate arbitrage, but it raises the cost of operating “outside.”
“Regulation won’t prevent the next blow-up”
Correct. Regulation reduces some risks and transforms others. It doesn’t remove human behaviour: greed, leverage, and poor governance. But regulation can change blast radius. It can force better disclosures. It can enforce custody standards. And it can make it harder to sell dangerous products to consumers who don’t understand the risk.
Conclusion: the perimeter is the point
The story of crypto regulation isn’t “government versus innovation.” It’s “money versus money.” It’s a fight over what society will accept as value transfer at scale — and under what rules.
If you’re building in this space, the goal shouldn’t be to avoid regulation. The goal should be to design a business that can win inside the perimeter — because that’s where distribution, trust, and institutional adoption live.
What I’m watching next
- Stablecoin frameworks: especially how central banks treat systemic stablecoins and payment use cases (Bank of England).
- Enforcement trends: particularly around promotions and on/off-ramp controls (FCA).
- Global convergence: the practical adoption of standards shaped by FATF, IOSCO, and the FSB (FATF).
About the author
Nick Marr writes on regulation, technology, property, and market disruption, focusing on how policy and innovation reshape real-world outcomes.
This article is for informational purposes only and is not financial or legal advice.
