The year 2025 was, by all accounts, a banner year for crypto—or at least, for specific corners of it. Global Crypto Policy Review Outlook 2025/26 Report paints a picture of regulatory clarity driving institutional adoption and stablecoins taking center stage. But a closer look at the jurisdictional developments and the inherent contradictions reveals a more nuanced, and frankly, more worrying, reality.
The report highlights that over 70% of jurisdictions reviewed progressed stablecoin regulation in 2025. That sounds impressive, doesn't it? But let's unpack that percentage. Progress doesn't equal perfection, or even effectiveness. Just because a regulator started working on stablecoin rules doesn't mean they've crafted a framework that's both innovation-friendly and protects consumers.
The report touts the US' GENIUS Act and the EU's MiCA rollout as examples of progress. But the GENIUS Act, while landmark, still faces implementation hurdles (regulations aren't due until mid-2026, and the act itself won't fully take effect until 2027). MiCA, meanwhile, is already showing cracks, with national authorities diverging on their approaches. The French, Austrian, and Italian regulators are already calling for a stronger EU-level framework, citing "major differences in how crypto markets are being supervised." This isn't a sign of a mature, well-oiled regulatory machine; it's a sign of potential regulatory arbitrage and confusion.
And here’s something that I find genuinely puzzling: The report mentions the Basel Committee's reassessment of prudential rules for banks' crypto exposures. The original framework would have required full capital deductions for most crypto assets, including certain stablecoins. The fact that this is being "reassessed" suggests a softening of regulatory attitudes, but is it a smart softening? Are regulators truly equipped to assess the systemic risk posed by banks holding potentially volatile crypto assets? Or are they bowing to industry pressure?
The narrative of "institutional adoption fueled by regulatory clarity" is seductive, but it's crucial to remember that correlation doesn't equal causation. Financial institutions announcing digital asset initiatives in 80% of reviewed jurisdictions sounds impressive, but how many of those initiatives are actually significant? Are they truly embracing public blockchains, or are they dipping their toes in with cautiously controlled pilot programs? The devil, as always, is in the details – details the report glosses over.
The report claims that VASPs (Virtual Asset Service Providers), the most widely regulated segment of the crypto ecosystem, have significantly lower rates of illicit activity than the overall ecosystem. Okay, but that's a bit like saying that restaurants with health code inspections have fewer cases of food poisoning than unregulated street vendors. It’s hardly a revelation. It's also a potentially misleading comparison. The "overall ecosystem" includes DeFi protocols, mixers, and other unregulated entities. Of course regulated VASPs look better in comparison. The real question is: how much illicit activity still flows through regulated VASPs, and is that amount decreasing at a rate that justifies the regulatory effort? The report doesn't provide those numbers.
The report highlights North Korea's $1.5 billion hack on Bybit as an example of how illicit actors exploit unregulated technologies. (The exact figure was over USD 1.5 billion in Ethereum tokens). And that's a fair point. But the fact that such a massive hack still occurred in 2025, despite years of regulatory efforts, underscores the limitations of the current approach. Cross-jurisdictional coordination and real-time information sharing are essential, but they're clearly not enough.
The report pats the industry on the back for the launch of Beacon Network, a real-time information-sharing platform. But the fact that this platform is supported by VASPs representing over 75% of total crypto volume doesn't mean that the entire industry is committed to fighting illicit finance. What about the other 25%? And how effective is this information sharing in practice? Are law enforcement agencies actually able to use this information to disrupt illicit activity, or is it just a PR exercise?
The report also mentions that the FATF warned that gaps in standards implementation persist. That's an understatement. The reality is that regulatory arbitrage is rampant. Illicit actors can simply move their operations to jurisdictions with weak or non-existent frameworks. The global nature of crypto makes this problem incredibly difficult to solve, and the report doesn't offer any concrete solutions.
The Global Crypto Policy Review & Outlook 2025/26 report presents a superficially optimistic view of crypto regulation in 2025. But a closer examination reveals that the progress is uneven, the challenges are persistent, and the data is often presented without sufficient context. Stablecoins may be soaring, but regulators are still struggling to keep up. And the fight against illicit finance is far from over. The report is a useful snapshot of the current landscape, but it's important to read between the lines and recognize that the reality is far more complex and uncertain than the report suggests.
The data points to progress, but the devil's in the implementation. Until regulators can demonstrate that they are effectively addressing the systemic risks and illicit finance concerns, the optimism surrounding crypto's regulatory maturity is premature.
