Author: CryptoCompound
Translation: Shaw Jinse Finance
Every round of cryptocurrency bull markets has a theme. The theme of 2017 was speculation, the theme of 2021 was innovation, and the theme of 2025 may be regulation.
After a decade of blurred boundaries and mixed signals, global regulators are finally beginning to move from ambiguity to clear frameworks. Discussions that once revolved around "Will they ban it?" are shifting to "How can we scale safely?"
This transition from uncertainty to a clear framework lays a solid foundation for the next wave of institutional adoption worth trillions of dollars.
Regulatory clarity will not stifle the market. It will legitimize the market.
Why Regulatory Clarity is the True Catalyst
The rise and fall of the cryptocurrency market depend on access to capital—and most capital is still constrained by regulatory barriers. Pension funds, insurance companies, and sovereign wealth funds cannot easily "follow the trend." Their operations must adhere to established frameworks: which assets qualify as securities, who can custody assets, how information disclosure is conducted, and which exchanges meet compliance standards.
When regulatory requirements change, the eligibility criteria also change. When eligibility criteria change, capital flows.
Therefore, the biggest factor driving the long-term value growth of cryptocurrencies is not just another halving cycle or a new Layer-2 protocol. It is the maturity of regulation—integrating cryptocurrencies into the formal financial system while preserving their core innovations.
United States: From Enforcement to Infrastructure
For years, the U.S. has been the most influential yet frustrating jurisdiction in the cryptocurrency space. But this situation is beginning to change.
Coordination between the SEC and CFTC.
After a decade of jurisdictional disputes, these two agencies have initiated a coordinated effort to clarify how spot cryptocurrency products are traded. This is a genuine first step towards coordination—something that was once politically unimaginable.The ETF Effect.
The approval of the 2024 spot Ethereum ETF broke the psychological barrier that Bitcoin held alone. Months later, Solana ETFs were also launched, backed by real trading volumes, custody infrastructure, and a history of derivatives trading.
Once crypto assets are included in an ETF, they instantly become a legitimate asset class. Pension fund managers can buy them, financial advisors can allocate them, and broker-dealers can recommend them. This packaging permanently changes the buyer demographic.
Stablecoin Legislation.
The "Payment Stablecoin Act" and its follow-up draft for 2025 are laying the groundwork for standardized frameworks regarding reserves, custody, and transparency. Stablecoins are the bridge between cryptocurrencies and the traditional economy—once regulated, they will become a bridge rather than a threat.
Insights from the U.S.:
If the Bitcoin ETF is a proof of concept, then the Ethereum and Solana ETFs are templates. In the coming year, we need to focus on which assets can develop the corresponding infrastructure, monitoring sharing mechanisms, and custody capabilities to qualify for packaging as ETFs. These are the tokens that can attract institutional capital—not fleeting "Meme coins," but regulated underlying assets.
European Union: MiCA Transforms Theory into Law
The European Markets in Crypto-Assets (MiCA) framework is now in effect and will be fully implemented by 2025. This is the first comprehensive, cross-regional regulatory framework for digital assets, redefining the meaning of "compliance."
MiCA requires all cryptocurrency service providers (CASPs) to meet strict standards, including capital adequacy, risk management, governance, information disclosure, and custody agreements. It is akin to a banking license in the cryptocurrency space—once licensed, they can operate across the EU.
For institutions, this is undoubtedly a significant victory. It means they can participate in digital asset businesses within a predictable framework, without having to guess which jurisdiction is "safe."
For startups, this serves as a filtering mechanism. Compliant companies can secure funding and partnerships, while non-compliant companies will be eliminated.
Insights from the EU:
MiCA is turning regulation into a competitive barrier. Exchanges, brokers, and custodians certified under MiCA will dominate liquidity in Europe. For investors, this means identifying which platforms and tokens comply with this regulatory framework early—because once banks start accepting them, liquidity will quickly concentrate.
United Kingdom: Building a Trust Layer
The UK Financial Conduct Authority (FCA) and the UK Treasury have taken a slower, more cautious approach—but it is equally crucial.
The FCA's latest round of consultation papers sets strict guidelines for stablecoin issuers and custody services, ensuring customer segregation and prudent regulatory measures. Meanwhile, the UK Treasury has hinted that stablecoins will not be included in the core payment network until a more robust regulatory framework is established.
While not as attention-grabbing as the U.S. ETF news, the core of the UK's regulatory process is institutional trust. Once these safeguards are fully in place, London is expected to become a significant hub for custody, derivatives, and stablecoin settlements.
Insights from the UK:
Investors should pay attention to companies that comply with regulations early—custodians, fintech companies, and exchanges that meet FCA requirements will have priority in securing banking partnerships and institutional capital inflows.
Singapore: The Precision Regulator
If the U.S. is a passive responder and Europe is comprehensive, then Singapore is precise in its approach.
The Monetary Authority of Singapore (MAS) has some of the highest standards for licensing digital asset companies globally. Only companies with robust anti-money laundering, risk management, and operational control mechanisms have a chance of approval.
Singapore intends to set this high standard as a design goal—it aims to become a global clearing center for trusted digital finance, rather than the next offshore casino.
MAS is finalizing a stablecoin framework limited to the Singapore dollar and certain G10 currencies. In practice, this means fewer issuers but higher trust.
Insights from Singapore:
Fewer participants lead to increased confidence. Investors should view licensed platforms in Singapore as a safe harbor for long-term capital allocation in Asia.
Six Regulatory Triggers to Watch
Here are specific key points that may trigger market volatility and opportunities in the next two quarters:
New U.S. Spot ETFs
In addition to BTC, ETH, and SOL, there are new spot cryptocurrency ETFs—focus on applications related to L2 ecosystems or staking yields.Progress of the Stablecoin Bill in the U.S. Congress.
The version approved by Congress will significantly enhance capital efficiency in the decentralized finance (DeFi) space.First CASPs Licensed under MiCA in Europe.
Early adopters are expected to receive a premium—liquidity will concentrate around them.Final Release of Custody Rules by the UK FCA.
This could open doors for cryptocurrency-native companies to collaborate with traditional banks.Licensing Announcements from Singapore MAS.
Any large U.S. or EU companies that receive approval will signal the market.Unified Guidance Across U.S. Agencies.
Coordinated actions by the SEC and CFTC will immediately elevate the risk premium across the industry.
Each occurrence of such events signifies the elimination of regulatory uncertainty—followed by reduced volatility and increased institutional liquidity.
Turning Rules into Returns
So how can investors truly leverage the advantages of regulatory measures, rather than just "hoping for regulatory clarity"?
1. Hold Eligible Assets.
Clearly categorized and custody-supported cryptocurrencies (like BTC, ETH, SOL) will continue to attract ETF demand. Each new ETF launched expands the buyer demographic.
2. Infrastructure Compliance.
Exchanges, wallets, and brokers that receive MiCA or FCA approval are effectively gaining regulatory monopolies. Investing in the stocks of these companies may yield excellent performance.
3. View Stablecoins as Revenue Channels.
Once regulated, high-quality stablecoins will evolve from entry tokens to institutional revenue tools—similar to money market funds. This is crucial for the mainstream adoption of DeFi.
4. Focus on Narrowing Volatility.
Each instance of market regulatory clarity tightens spreads and reduces uncertainty. Capitalize on this by going long on volatility before announcements and gradually reducing positions afterward.
5. Look Globally, Act Locally.
Different regions are at various stages of development. Europe leads in regulation, the U.S. leads in liquidity, and Asia leads in innovation. Diversifying investments by jurisdiction is as important as diversifying by asset class.
Possible Scenarios for 2026
Bull Market Scenario (40%):
The coverage of U.S. spot ETFs expands beyond major assets; MiCA licensing accelerates; stablecoin-related laws are passed; institutional adoption rates surge.
Outcome: Higher participation, rising valuations, and reduced volatility.
Base Scenario (45%):
Transparency gradually increases; ETF growth is slow; MiCA promotion is uneven; stablecoin legislation is delayed.
Outcome: Some participants benefit; the gap between regulated and unregulated participants widens.
Bear Market Scenario (15%):
Political gridlock, new enforcement actions, or delays in policy implementation.
Outcome: Short-term sell-off, long-term buying opportunity.
Conclusion
In the history of cryptocurrencies, regulation is no longer the enemy, but the key to unlocking potential.
Every new rule, framework, or license reduces uncertainty and expands access. Every clear regulation brings cryptocurrencies closer to becoming a global core asset class.
The next bull market will not only reward those who entered early but also those who are prepared: those who understand how the regulatory landscape is shaped and position themselves before other investors follow suit.
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