A crypto regulation masterclass and the future of stablecoins, with Mike Ringer
Perhaps no market is being shaped more by regulation than crypto, so today’s Playbook is a must-read for founders and investors alike. Trump’s embracing of the sector following years of regulatory uncertainty and regulation-by-enforcement in the US; Europe’s early moves in regulating stablecoins and cryptoassets more broadly; and similar moves by other regulatory authorities globally have created a complex and fragmented picture – just as mainstream financial institutions really start to take crypto seriously.
So what is the status of global crypto regulation today, and what does this mean for startups operating in and around the UK? Today’s Playbook comes from none other than Mike Ringer, a Partner at CMS and co-Lead of their Crypto and Digital Assets Group. Having worked as European Head of Legal & Regulatory at the world’s biggest crypto exchange, Mike has a front-row seat to the evolving regulatory landscape of the UK, Europe and beyond.
In this conversation, we cover the evolution of global crypto regulation from early frameworks, the implications of Europe’s MiCA Regulation and the US’s new Crypto Task Force, and evolving stablecoin regulation. If you’re building or investing in this space, this is essential reading.
FORM: Mike, let’s start with how crypto regulation took shape globally. Can you walk us through the early developments?
MR: It really started on an international level in 2018 when the Financial Action Task Force (FATF) published Recommendation 15, which essentially told all its member countries: "You need to introduce AML/CTF laws covering crypto asset exchange and custody activities, requiring market players to be licensed or registered."
In Europe, this guidance led to updates to the Fifth Anti-Money Laundering Directive (5AMLD) to require licensing or registration of ‘virtual asset service providers’ (VASPs) at the national level for AML/CTF purposes. But, 5AMLD being a Directive requiring national transposition across the 27 EU Member States, the challenge was that European countries interpreted and implemented this differently — leading to a highly fragmented regulatory landscape across Europe.
FORM: You mentioned a key distinction between registration and licensing. Can you explain why that matters?
MR: Registration in this context generally just means a firm has to comply with AML/CTF obligations. Licensing, however, is much more comprehensive. It generally involves prudential requirements, governance standards, operational safeguards, and other elements of full financial regulation.
Some EU Member States, like Lithuania, Italy and Poland made registration incredibly easy – businesses could get through the process in two weeks, pay a fee, and claim to be a "regulated crypto company". Others, like France, had a much stricter process that more closely resembled full authorisation. This inconsistency created regulatory arbitrage, where companies shopped around for the easiest jurisdiction.
FORM: What about the UK? How did it approach this?
MR: Crypto was initially brought under AML registration requirements in 2019. But the FCA became increasingly cautious in its approach to granting registrations and the process quickly became one of the toughest in the world, with around 86% of applications for registration rejected to date.
If you were being provocative, you might say they didn’t yet know what they wanted from the sector, so the de facto policy was to block entry while they figured it out.
In the background, the Europeans started working very hard and very quickly on an overarching EU regulation (MiCAR), because they recognised the insufficiency of the AML registration regime under 5AMLD for cryptoasset markets.
FORM: And that brings us to MiCAR, the EU’s Markets in Crypto-assets Regulation. What impact has that had?
MR: MiCAR was a game-changer. Much like MiFID II for traditional finance, MiCAR ensures that crypto businesses need proper licensing, not just simple registration.
MiCAR is now in effect, but regulatory arbitrage is still a real concern, because some EU Member States historically haven’t enforced the rules as rigorously as others — Cyprus is the classic example in the crypto context. FTX’s European broker was regulated there (under MiFID II, rather than MiCAR, because it was dealing in crypto derivatives, which are treated as traditional financial instruments). Post-FTX collapse, the Cyprus regulator, CySEC, was specifically called out by the European Securities and Markets Authority (ESMA) for failing to regulate the European broker properly.
(That’s also an important distinction on spot crypto vs crypto derivatives: if you’ve got a tokenised version of a security or derivative, it’s still generally regulated under existing financial laws (like MiFID II in the EU), not MiCAR. That’s the case in most jurisdictions — regulators don’t care if it’s a token; they care about the underlying asset.)
This regulatory arbitrage is why European regulators are now scrambling to tighten enforcement. We’ve seen a wave of publications from ESMA and the European Banking Authority (EBA) instructing Member States to align on interpretation and enforcement.
FORM: The US is back in the crypto game in a big way under Trump. How might that play out?
MR: Yes, we’ve seen some clear signals from the US recently, representing an almost complete 360 pivot from the pre-Trump position. The SEC recently announced a new Crypto Task Force, led by Hester Peirce, who is nicknamed “Crypto Mom”. This comes after years of turf wars in the US between the SEC and the CFTC over who should regulate crypto. With this Task Force in place, it signals that the US is finally moving toward a proper regulatory framework, rather than relying on legal battles.
The first example of this is the stablecoin regulation currently making its way through the two houses – the GENIUS Act and the Stable Act. This comes off the back of an Executive Order from President Trump emphasising the importance of fostering the development of USD-backed stablecoins in supporting global USD hegemony.
But I’ll be really interested to see what happens if the Trump administration tries to rush through regulation too quickly. It might hit too many legal and institutional roadblocks to completely overhaul the system, so more likely, we’ll end up with something middle-of-the-road, but workable — shaped by real industry consultation via the new Task Force.
FORM: Stablecoins have become a focal point of geopolitical regulatory tension. What challenges surround global adoption and market stability?
MR: The EU’s clear goal is to limit the use of non-European stablecoins within the EU. They’ve therefore imposed issuer localisation and reserves requirements, as well as volume caps which makes it much harder for non-euro stablecoins to be widely used in European markets.
Conversely, as we’ve just discussed, the US sees USD stablecoins as part of its financial domain, so the EU trying to require issuers of these stablecoins to localise in the EU and restricting their use is a huge jurisdictional clash - and a headache for crypto businesses. If you’re a European business and want to accept USDC, for example, it’s not just a question of the issuer being appropriately regulated in the EU, you also have to comply with the volume limits on how much non-euro stablecoin activity can take place in the EU.
A good example of how this plays out in practice is Circle. They’ve tried to bridge the gap with a dual-issuer model, with Circle France and Circle US both issuing USDC. The claim is that USDC is “fully fungible” between the two, but from a legal perspective, that’s hard to support — they are separate financial instruments issued by two different legal entities under different regulatory regimes, with different classifications under MiCAR. And because stablecoins generally aren’t tagged to show whether they came from a US or EU entity, it’s nearly impossible to track them at scale and recalibrate reserves requirements accordingly based on the number of EU vs non-EU holders, given secondary market trading the issuers do not control.
The UK government initially proposed to recognise overseas stablecoins deemed to meet local standards for the purposes of payment services regulation, but changed its proposed approach late last year to drop bringing stablecoins within payment services regulation, meaning its approach to overseas stablecoins remains unclear. The US, meanwhile, is proposing an equivalence / recognition framework for overseas stablecoins, including those denominated in USD.
And then there’s the payments problem. Under MiCAR, single currency fiat-referencing stablecoins (EMTs) are classified as e-money, meaning they fall within the scope of EU payment services regulation as well as crypto regulation. That means if you’re transferring stablecoins between platforms, you might also need a payment services licence on top of a crypto asset service provider (CASP) licence. The industry has been scrambling to work out how to comply with this double-licensing issue, and it’s creating massive headaches.
FORM: So where does this leave crypto businesses in the UK today?
MR: It’s a mixed bag. Some activities, like crypto lending, are still unregulated, which makes it easier to operate but harder to build trust with investors. Other areas, especially anything tied to tokenised securities, are a nightmare due to double regulation (for example, UK firms trading or custodying tokenised bonds need both MiFID-equivalent authorisation and crypto AML registration, something that’s unnecessary in the EU due to tokenised securities being carved out of MiCAR).
The UK’s new crypto framework will fall under FSMA (the Financial Services and Markets Act) and the RAO (Regulated Activities Order), meaning it will sit within the same regulatory framework as traditional finance — unlike the EU’s approach to housing crypto regulation under an entirely separate regime (MiCAR). In theory, this should make compliance more streamlined for traditional financial firms, but it also risks copy-pasting financial rules that don’t fit crypto.
One major shift in the UK’s crypto regulation is the proposed geographical scope, which marks a huge departure from existing financial services law.
Right now, if you're providing traditional investment services, the key test is whether you are “carrying on a regulated activity by way of business in the UK.” If you're an overseas firm providing cross-border services to UK customers, you're therefore generally not within scope of the UK’s licensing regime (subject to some exceptions).
But in its consultation on the future crypto regulatory framework, the UK government proposed to cover services provided “in or to” the UK. That’s a huge shift in scope that could massively increase the compliance burden for overseas crypto firms, requiring them to establish locally regulated entities in order to continue servicing UK customers.
The industry is understandably frustrated. Online stockbrokers have operated cross-border for years, so why is crypto being treated differently? More importantly, how does this interact with existing financial promotions regulation? The government hasn’t provided answers, only confirming that they’re sticking with this approach, leaving firms in limbo about what “provided in or to” will actually mean in practice. This is one of the biggest open questions in the UK’s crypto regulatory framework — and given how dramatically it could reshape how crypto firms operate in the UK, it’s one to watch closely.
FORM: Final question — what else should investors and founders in the crypto space be thinking about over the next year?
MR: Keep an eye on the EU MiCAR implementation, especially as it phases out transitional periods for firms operating under old rules. Anyone operating in the EU needs a MiCAR license by mid-2026 or they’re out. The next 12-24 months are critical. Businesses that get their regulatory strategy right now will have a massive advantage over those that wait until the last minute.
The UK is still in the consultation phase. Realistically, we won’t see finalised rules until 2026 at the earliest, per the FCA’s latest roadmap. Full implementation for authorisation requirements could therefore still extend into 2027, factoring in transitional arrangements. If you’re in the UK, you need a two-year regulatory roadmap. If you’re not already registered under the Money Laundering Regulations, it may not be worth it at this point because the whole system is going to be replaced – that’s something to weigh up. Instead, crypto startups should focus on preparing for full authorisation under the upcoming UK regime.
Lastly, look out for movement globally. The Middle East, particularly Dubai and Abu Dhabi, has been proactive in setting up clear crypto regulatory frameworks. Singapore has expanded its Payment Services Act to cover a broader range of activities; and Hong Kong, which previously had a very narrow approach, is similarly expanding the scope of regulated activities.
The global race for crypto market dominance is well and truly on – and the markets don’t wait around for legislators and regulators to get their acts together.