CASP Regulatory Impact Report — Week Ending 29 August 2026 Header

Constructive on US institutional custody, unresolved on EU stablecoin economics, and a new state-level tax risk that almost nobody is pricing.

Washington has reopened the definition that decides who receives institutional custody mandates.

Illinois has priced storage as a taxable event, and other state legislatures are watching.

The EU deadline moved a month. The exposure did not.

1. The SEC reopens who counts as a qualified custodian

The Development. On 25 August, the SEC’s Division of Investment Management sent “Amendments to the Custody Rules” (RIN 3235-AN46) to the Office of Management and Budget, tagged economically significant and filed in the deregulatory column under Executive Order 14192. A formal proposal is targeted for October.

The Business Impact. The rule decides who may hold client crypto for an investment adviser or a fund under the Advisers Act and the Investment Company Act — in plain terms, which firms count as a “qualified custodian”. Widen that category to state trust companies and crypto-native custodians, and the regulated custody market expands to take in the adviser and fund channel. Keep it narrow, and crypto-native custodians lose institutional flow to bank custody arms exactly as that flow arrives.

The Revenue Reality. Nothing has moved on the P&L and nothing will this quarter. The “economically significant” tag means a rule with an annual effect on the economy of $100m or more — a classification threshold, not a forecast for anyone’s book. Custody is a basis-point business, so the value sits entirely in mandate volume, and mandates follow the definition. Model both outcomes now; the text lands before year-end and there will be no time to model it then.

2. Industry sues Illinois over a tax that attaches to storage

The Development. On 21 August, the Blockchain Association and the Crypto Council for Innovation filed in the Circuit Court of Sangamon County challenging the Illinois Digital Asset Tax Act (35 ILCS 195/3-5), which imposes 0.2% on the full value of a digital asset each time it is exchanged, transferred or stored through a digital-asset broker from 1 January 2027. The complaint runs to seven counts, including Internet Tax Freedom Act pre-emption and the dormant Commerce Clause.

The Business Impact. Structural, and worse than a fee increase. The levy attaches to transfer and storage, not only to trades — so a custody balance can be taxed with no transaction occurring at all. That is a charge on assets under custody dressed as a transaction tax. It also sets the precedent other revenue-hungry state legislatures will copy long before the Illinois ruling lands.

The Revenue Reality. Twenty basis points on notional. Spot taker fees at the major venues run from under 10bp at high-volume tiers to 60bp and above at headline retail rates — so for the high-volume flow that carries most of the notional, the tax exceeds the fee on the trade, and it also attaches to transfers and storage that carry no fee at all. Two responses exist and both cost money: pass it through and lose Illinois volume to offshore venues and self-custody, or absorb it and run the state at negative margin. Carve Illinois out as its own line in the 2027 plan.

3. The EU item filed under “2027”: MiCA’s interest ban is genuinely in play

The Development. The European Commission’s targeted MiCA review consultation, open since 20 May, closes on 30 September — extended by one month on 29 June from its original 31 August deadline. It asks directly whether the prohibition on interest and interest-like remuneration for asset-referenced tokens and e-money tokens (Articles 40 and 50) should be maintained, and whether staking and lending should be regulated in their own right rather than left where ESMA’s Q&A 2067 and Q&A 2883 put them.

The Business Impact. The impression worth correcting is that this is distant. It is filed as “MiCA 2.0”, the Article 140 report is not due until 30 June 2027, and it is therefore being read as unactionable. That reads the process backwards. The consultation is the only point at which industry evidence enters the record from which that report and any legislative proposal are drafted. The extension moved the deadline, not the exposure: after 30 September the input closes — the outcome does not.

The Revenue Reality. The largest P&L line of anything this week. The interest ban is precisely what stops EU issuers and CASPs paying yield and retaining net interest margin on reserve assets — the economics US issuers already run on. Reversal turns a compliance cost centre into a funding business. Staking is the second line: moved out of ancillary custody treatment into a standalone regime, staking commission — commonly 10 to 35% of rewards — picks up new capital, disclosure and liability overhead.

Watchlist — hard dates

• 14 Sep — US (Senate). Returns from recess; CLARITY Act floor time still unscheduled, and the SEC and CFTC continue rulemaking in its absence. Exposure: legislative risk.

• September, date unset — US (OMB). Clearance of the SEC custody proposal; publication can follow within days. Exposure: timing risk.

• 22 Sep — UK (Bank of England). Consultation on the draft Code of Practice for sterling-denominated systemic stablecoin issuers closes; the Bank intends to finalise by end-2026. Exposure: any sterling stablecoin ambition.

• 30 Sep — EU (European Commission). MiCA review consultation closes. Final input on the stablecoin interest ban, staking and lending. Exposure: the lobbying window, and the largest revenue line of the week.

• 30 Sep — UK (FCA). Cryptoasset authorisation gateway opens, with a window to 28 February 2027. Exposure: authorisation.

• 19–20 Oct — US (Treasury and SEC). Comment deadlines for Treasury’s GENIUS Act section 3 proposed rule (19th) and the SEC’s Regulation Crypto Assets (20th). Exposure: drafting starts this month, not next.

Two of this week’s three items are definitional, not numerical. They decide which market you are in before they decide what it costs. Model the definitions.

Prepared by denouement — UK cryptoasset and digital-asset regulation advisory.