The US Senate advances crypto regulation bill, Australia fines crypto exchange over AML reporting failures, and the UK drafts crypto asset authorisation laws – plus other crypto updates.
Lexology PRO looks at the latest developments in cryptocurrency and virtual asset regulation around the world over the past fortnight and provides useful commentary and guidance for businesses.
This key update was produced with the assistance of generative AI.
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New legislation and rules
On 20 May 2025, the US Senate voted to advance the GENIUS Act, a major cryptocurrency bill aimed at creating the first federal framework for regulating stablecoins. The legislation would require issuers to hold full reserves, adhere to stronger anti-money laundering (AML) rules, and undergo regular audits. The bill had previously stalled in the Senate earlier this month due to opposition from several Democratic lawmakers.
On 1 May 2025, the US Financial Crimes Enforcement Network (FinCEN) issued a notice of proposed rulemaking (NPRM) under the Patriot Act 2001 identifying Cambodia-based financial conglomerate Huione Group as a primary money laundering concern, proposing to sever its access to the US financial system. The group allegedly laundered over US$4 billion in illicit proceeds, including funds tied to North Korea cyber heists and crypto scams. FinCen is requesting comments for 30 days after the publication of the NPRM.
On 29 April 2025, UK Chancellor Rachel Reeves unveiled a draft legislation, aiming to bring crypto assets and related activities within the UK regulatory perimeter. The proposed rules will require full authorisation for firms issuing stablecoins, operating trading platforms, or offering custody and brokerage services. The draft legislation is open for consultation until 23 May 2025.
Enforcement
On 16 May 2025, the Australian Transaction Reports and Analysis Centre fined cryptocurrency exchange provider Cointree AU$ 75,120 (US$50,000) for failing to submit suspicious matter reports within three days of detecting the suspicious activity, as required under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.The action followed Cointree’s voluntary disclosure of the breaches, and the company has paid the penalty in full.
On 16 May 2025, the co-founder of cryptocurrency service provider Tornado Cash told a Manhattan federal court that prosecutors withheld evidence challenging claims that the crypto mixing service operated as a money transmitting business without a licence. The defence cites internal communications from the US Department of Justice from another case which suggests that entities without custody of cryptocurrency may not qualify as money transmitting businesses under FinCEN guidance. The defence has requested that prosecutors disclose any similar material relevant to Tornado Cash.
Regulatory and industry updates
On 15 May 2025, the US Securities and Exchange Commission (SEC) issued guidance for SEC-registered broker-dealers and transfer agents on custody and recordkeeping of digital assets. The guidance clarified that non-security crypto assets are not subject to the SEC Rule 15c3-3 (Customer Protection Rule) and are not covered by the Securities and Investor Protection Act 2023 in case of broker-dealer insolvency. It also noted that SEC-registered transfer agents may use distributed ledger technology (DLT) to meet regulatory requirements, provided records are secure, accurate, and accessible.
On 7 May 2025, the US Office of the Comptroller of the Currency (OCC) announced that banks can now offer a range of crypto services, including trading, settlement, valuation, and outsourcing to third parties, provided they meet OCC risk standards. This follows a broader regulatory shift, including the removal of the Fed’s prior notification requirements for crypto activities and the US SEC repealing restrictive accounting guidance.
On 6 May 2025, the Securities Commission Malaysia launched a public consultation on a proposed framework for tokenised capital market products, such as tokenised shares, bonds, and funds using distributed ledger technology. The framework aims to enable innovation while maintaining investor protection and regulatory consistency with existing securities laws. The consultation is open until 16 June 2025.
On 27 April 2025, the European Securities and Markets Authority issued multiple guidelines under the Markets in Crypto-assets Regulation covering system security standards, third-country firm conduct, investor protection in crypto transfers, and classification of crypto assets. The guidelines clarify licensing, security, and investor protection obligations for crypto service providers. They also help define when and how crypto assets may be treated as financial instruments under EU law.
On 25 April 2025, US stock exchange operator Nasdaq urged the US SEC to adopt a four-tier taxonomy for digital assets, which includes financial securities, digital asset investment contracts, digital asset commodities, and other digital assets. Nasdaq recommends treating tokenised securities like their traditional counterparts and called for “light touch regulation” for certain investment contracts.
On 24 April 2025, the US Federal Reserve Board withdrew prior guidance documents related to banks' crypto-asset and dollar token activities to align regulatory expectations with evolving risks and support innovation in the banking system. This includes rescinding the 2022 letter requiring state member banks to notify the Board of crypto activities and the 2023 letter on the supervisory nonobjection process for dollar token activities. The Board and the Federal Deposit Insurance Corporation also withdrew from two joint 2023 statements on crypto-asset risks.