Guide to Digital Currencies: Understanding the Purpose of Cryptocurrency
In the dynamic world of cryptocurrency, regulations are becoming more defined as global authorities strive to balance innovation, investor protection, and financial stability.
United States
The passage of the GENIUS Act in July 2025 marks a significant step forward for the U.S., marking the first comprehensive legislation focused on stablecoins. The act mandates reserve requirements and anti-money laundering (AML) compliance, signalling a shift towards structured national policy away from case-by-case enforcement. Broader crypto regulation is still evolving, with ongoing attention to consumer protection and systemic risk.
European Union
The EU's Markets in Crypto-Assets Regulation (MiCA), effective since 2023, unifies crypto rules across all 27 member states. MiCA enhances market stability, investor protection, and transparency by establishing standardized regulatory frameworks for digital asset issuance and trading, including stablecoins. It represents a global leadership position in crypto regulation.
Other Regions
Countries like Singapore, Dubai, and Switzerland have adopted tailored, risk-based, and principles-based regulatory frameworks that emphasize transparency and innovation, alongside measures to detect illicit finance using AI and blockchain monitoring tools.
Global Regulatory Coordination Issues
Despite progress, fewer than 10 major economies have stablecoin-specific legislation. Ongoing global debates over regulatory standards, such as capital requirements for banks holding crypto assets (Basel framework discussions), reflect tensions between fostering innovation and maintaining system safety.
Securities and Exchange Commission (SEC) in the U.S.
The SEC shows cautious openness towards crypto exchange-traded products (ETPs) with new policies allowing in-kind creation/redemption but demands strong investor protection, disclosure, and operational oversight.
In summary, the worldwide crypto regulatory landscape is becoming more defined but remains varied, with the U.S. and EU leading major regulatory efforts focused on stablecoins and digital assets, while other jurisdictions experiment with balanced innovation and risk management approaches. Global coordination and comprehensive regulation beyond stablecoins remain key challenges.
The crypto transformation in 2025 will centre around mainstream adoption and regulatory clarity, with Bitcoin's surge to $111,000 by May 2025 signalling massive institutional confidence. Crypto firms are building bridges with traditional banks and financial institutions, offering crypto custody services to wealthy clients and integrating digital assets alongside traditional securities.
Transaction fees vary significantly by platform choice, with Bitcoin network fees ranging from $1 to $50 depending on network congestion, while some altcoins offer near-zero costs for basic transfers. Speculative trading drives much of the market action, with traders buying and selling based on hype rather than fundamentals.
Central bank digital currencies (CBDCs) may compete with traditional cryptocurrencies, while decentralized finance platforms continue reshaping how we think about banking and investment services. Global crypto adoption exploded by nearly 900% in 2021, with countries like Vietnam, India, Pakistan, Ukraine, Kenya, Nigeria, and Venezuela leading the charge.
Carbon credit trading platforms use blockchain technology to create transparent markets for environmental credits, helping companies offset their carbon footprints through verified sustainable projects. The market capitalization of cryptocurrency remains relatively small compared to traditional financial markets, making even modest investment flows cause dramatic price changes.
However, challenges remain, such as the dark web facilitating money laundering operations using cryptocurrency, security vulnerabilities plaguing the entire crypto ecosystem, and smart contract flaws that hackers exploit to drain funds. As the crypto landscape continues to evolve, regulatory bodies and industry players will need to collaborate to address these issues and ensure a secure and sustainable future for digital currencies.
Amidst the global push for crypto regulation, investing in technology-driven cryptocurrency ventures in the United States may require compliance with the newly enacted GENIUS Act and the Securities and Exchange Commission's (SEC) guidelines for crypto exchange-traded products (ETPs), focusing on investor protection and operational oversight.
On the other hand, European Union's Markets in Crypto-Assets Regulation (MiCA), already in effect, offers a unified regulatory framework for digital asset issuance and trading, positioning the EU as a global leader in crypto regulation, while promoting market stability, investor protection, and transparency.
