MICA to RegRally: The Crypto Guide, September 2025

ECOVIS ProventusLaw brings you a curated selection of significant developments from the European crypto regulatory landscape. It provides viewers a look at what’s ahead and high-profile insights into the ever-changing crypto industry.

EU: EBA Issues Draft RTS on Crypto-Asset Exposures under CRR3

In August 2025, the European Banking Authority (EBA) published draft Regulatory Technical Standards (RTS) under CRR3, setting out how EU banks must calculate and limit exposures to crypto-assets during the transitional period before the Basel framework is fully implemented.

Key points:

Capital charges: 250% for certain stable crypto-assets (ARTs) and 1,250% for most other crypto-assets, including Bitcoin.
Exposure cap: Aggregate exposures to high-risk crypto-assets are capped at 1% of Tier 1 capital, with only limited recognition of hedging and offsetting.
No internal models: Banks must apply the standardised approach; internal models are prohibited.
Crypto derivatives: Classified as a separate risk category with stringent capital treatment.
Exemptions: Exposures cleared through a qualifying central counterparty are exempt from the 1% cap.
Valuation rules: Deferred until the permanent regime is implemented.

Action points for EU credit institutions and CRR investment firms:

Adjust capital planning models to reflect the prescribed risk weights (250% for eligible ARTs, 1,250% for other crypto-assets and related derivatives/securities financing transactions).
Review exposure limits and update risk monitoring frameworks.
Ensure compliance processes anticipate stricter prudential treatment once permanent valuation rules enter into force.

FATF Warns UN Security Council on Rising Terrorist Financing Risks via Virtual Assets

On 22 August 2025, the President of the Financial Action Task Force (FATF) addressed the UN Security Council, stressing the evolving risks of terrorist financing, particularly the growing misuse of virtual assets.

Key insights:

Terrorist groups are increasingly exploiting privacy-focused technologies, obfuscation methods, and alternative platforms.
FATF reporting shows **ISIL-K extensively used virtual assets

Recommendations:

Implement robust blockchain analytics and monitoring systems to identify terrorist financing red flags in virtual asset transactions.
Conduct EED on customers, wallets, and jurisdictions with heightened terrorism financing risks.

Global Trade Associations Push Back on Basel Crypto-Asset Rules

On 19 August 2025, nine major trade associations — including GFMA, IIF, ISDA, and FIA — urged the Basel Committee on Banking Supervision (BCBS) to pause implementation of the Crypto-asset Exposures Standard (SCO60), due in 2026.

Main concerns:

Rules impose punitive capital charges, making bank participation in crypto prohibitively costly.
Framework is seen as outdated, ignoring progress in blockchain, tokenisation, and stablecoin regulation.
Call for properly regulated stablecoins to be recognised as collateral.
Criticism of “open vs. closed blockchain” distinction, urging risk-based assessments instead.
Argument that Bitcoin and Ether show liquidity comparable to traditional assets but face maximum capital charges.
Request to allow internal risk models, consistent with treating other asset classes.

Action point: Compliance teams should monitor regulatory divergence across key jurisdictions (EU, US, Singapore, Canada, Hong Kong) to anticipate cross-border supervisory challenges.

WFE Calls for Stricter Oversight of Tokenised Stocks

On 25 August 2025, the World Federation of Exchanges (WFE) urged regulators — including the U.S. SEC, ESMA, and IOSCO — to strengthen supervision of tokenised stocks. The WFE warned that these products are often promoted as equivalent to traditional shares, despite lacking shareholder rights, voting power, and legal protections. Issuers also face reputational risks if such products mislead investors or fail. Regulators, including SEC Commissioner Hester Peirce, stressed that “tokenised securities are still securities,” underscoring the need for compliance clarity.

UK Retail Investors to Access Crypto Exchange-Traded Notes

The FCA announced that, starting 8 October 2025, retail consumers can invest in crypto exchange-traded notes (cETNs) listed on UK Recognised Investment Exchanges. These products remain subject to the Consumer Duty and financial promotion rules, ensuring investors receive clear and appropriate information. cETNs are not protected by the Financial Services Compensation Scheme, and the ban on crypto-asset derivatives for retail investors remains. This move aligns with the FCA’s roadmap to expand retail access to regulated crypto products safely.

Compliance takeaway: Firms offering cETNs must ensure that all marketing, disclosures, and advice comply with the Consumer Duty and financial promotion rules and clearly communicate to investors the lack of FSCS protection.

Bank of Lithuania Sets Reporting Rules for CASPs

On 26 August 2025, the Bank of Lithuania adopted Resolution No. 03-121, defining financial, capital adequacy, and operational reporting requirements for CASPs (excluding credit institutions). The resolution enters into force on 1 January 2026 and covers reporting periods from Q1 2026 onward. Reports must include financial position, P&L, service revenues, own funds, capital requirements, client portfolios, transactions, investments, and token issuance/redemption data and are to be submitted quarterly and annually via the Bank’s reporting system.

CASP compliance recommendations:

Implement robust internal procedures to ensure accurate and timely submission of all required reports.
Update reporting systems to capture and format data according to the new templates, ensuring quarterly and annual reporting readiness.