Crypto regulation in the world weekly digest #172

The EU

The European Union is planning to centralize supervision of crypto-asset service providers (CASPs) under the European Securities and Markets Authority (ESMA). This move would shift regulatory oversight from individual national regulators to a single EU-level authority, granting ESMA direct power to authorize and supervise all crypto companies operating in the EU. The proposal, expected to be officially announced next month, aims to harmonize regulatory standards across member states, reduce fragmentation and regulatory arbitrage, simplify market entry for crypto firms, and strengthen investor protection.

Under the current framework (MiCA regulation effective since 2024), crypto firms obtain authorization from at least one member state regulator, but this decentralized licensing has led to inconsistencies in enforcement and regulatory intensity across countries. Centralizing supervision under ESMA would create uniform enforcement standards, streamline licensing, and potentially increase the intensity of controls. ESMA may also delegate some tasks to national regulators while maintaining overall authority.

This reform represents a significant restructuring of EU crypto regulation, enhancing ESMA's role as the key regulatory authority in the EU digital asset market. It aligns with EU goals of market standardization and greater integration of blockchain-based assets into the financial system. The draft proposal requires approval by the European Parliament and the Council of the EU and is seen as a crucial step following the adoption of MiCA.

China

China's Supreme People's Court has introduced new judicial rules to standardize the handling of criminal cases involving virtual currencies. These rules focus on how authorities should seize, value, and dispose of virtual assets involved in crimes such as fraud, money laundering, and illegal fundraising. The court aims to ensure that electronic evidence from blockchain transactions is authenticated and reliable for legal proceedings.

The new framework does not endorse cryptocurrency trading but seeks to provide judicial clarity and consistency for law enforcement and courts amidst increasing virtual currency-related crimes. It also calls for tougher penalties on operators knowingly supporting cross-border online gambling and crimes involving misuse or sale of citizens' personal data linked to virtual currencies.

This reflects China's broader effort to regulate digital assets, strengthen cybersecurity, and bring legal order to the digital economy while maintaining a strict stance against illegal crypto activities. These judicial updates do not signal a relaxation of China's crypto ban but rather complement it by strengthening enforcement, creating clearer rules for handling digital assets in legal proceedings, and managing risks in the digital economy. This approach ensures that while crypto ownership itself is not illegal, activities perceived as threats to social stability or cybersecurity, especially involving crypto assets, are rigorously controlled and punished within China's legal framework.

Kyrgyzstan

Kyrgyzstan has temporarily prohibited crypto mining from November 2025 until March 2026 due to energy shortages caused by low water levels affecting the country's hydropower-dependent national grid. The government aims to stabilize electricity supply and avoid blackouts during a challenging period of decreased power production linked to drought and declining water resources. The ban is strict, with authorities warning of criminal liability for those who attempt to resume mining operations prematurely.

In recent years, Kyrgyzstan has built a relatively advanced and regulated crypto market in Central Asia. Since 2022, it introduced the Law on Virtual Assets, which provides clear licensing and operational rules for crypto exchanges, mining, issuance, and trading. This law helped weed out unlicensed operators and raised standards by requiring capital floors and stringent AML checks.

Kyrgyzstan has also fostered crypto innovation, including a national digital som project expected for full launch by late 2026 after testing in 2025. The country also launched its first stablecoin pegged to the som and backed by the real-world gold in November, 2025. The crypto sector is growing in transaction volume and tax contribution, with hundreds of licensed operators and industrial miners before the current ban. The government's approach combines regulation, innovation, and efforts to integrate blockchain technology into the financial system while balancing energy realities.

News from other countries:

• The Czech National Bank (CNB) has made a historic move by investing $1 million in Bitcoin and other blockchain-based digital assets in November 2025. This test portfolio includes Bitcoin, USDC, and a tokenized deposit. The investment was approved internally and executed through regulated exchanges, with custody managed entirely within the bank without external providers. Importantly, these digital assets are held outside the CNB's existing international reserves, reflecting a cautious pilot approach rather than a full integration into reserve policies.

• Russia plans to establish comprehensive cryptocurrency regulation beginning in 2026, with a strong focus on transparency, investor protection, and controlling illegal activity. The Central Bank of Russia (CBR) will take a central role in this regulatory framework, requiring all crypto transactions by Russian residents to go through licensed intermediaries such as brokers and digital wallet providers. These intermediaries will have authority to block accounts suspected of dealing with unlicensed services, enhancing anti-money laundering enforcement.

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