Key Regulatory Developments for CASPS w.e. November 14, 2025

James Ross
Nov 15
11 min read

1. Executive Summary: The Quantifiable “Cost of Legitimacy” and Market Consolidation

This reporting period introduced several regulatory developments with substantial implications for CASP operational models and capital planning. The common theme is a rise in the measurable “Cost of Legitimacy,” as illustrated by the prudential requirements outlined in the Bank of England’s (BoE) consultation on systemic stablecoins. The proposal for a 40% unremunerated reserve requirement held at the central bank highlights the significant capital cost of stability. It directly challenges the yield-based revenue models that underpin the stablecoin sector.

A likely strategic consequence of this new, high-cost environment is accelerated market consolidation. The combined prudential and operational expenses establish a significant barrier to entry for new firms and pose an existential threat to under-capitalised existing players. This week’s events indicate a clear policy direction in the UK towards a market structure comprising fewer, larger, and well-capitalised firms.

Significant market expansion opportunities offset this consolidation pressure. While UK standards emphasise compliance costs, trends in the United States and the Asia-Pacific (APAC) region suggest potential market growth.

In the U.S., the introduction of a new bipartisan Senate bill to give the CFTC authority over digital commodities—and, importantly, a funding mechanism—offers a feasible route towards the regulatory clarity the industry has long desired. This, along with the end of the 43-day federal government shutdown, restarts key regulatory timelines, chiefly among them the pending spot crypto ETF applications.

At the same time, in Singapore, the Monetary Authority of Singapore (MAS) is actively developing the next-generation institutional market for tokenised real-world assets (RWAs), announcing a pilot for tokenised government securities settled with a wholesale CBDC.

The key takeaway is a definitive shift away from the sector’s early “growth-first” ethos toward a model requiring bank-like compliance structures and operational resilience.

2. CRITICAL DEVELOPMENT: United Kingdom – Establishing a High-Trust, High-Cost Prudential Regime

Regulatory initiatives in the United Kingdom dominated this week. Through a coordinated approach, the Bank of England (BoE) and the Financial Conduct Authority (FCA) are developing a framework that prioritises prudential stability and consumer protection. This regime will, in turn, impose significant new compliance and capital-related costs, likely reshaping the domestic market.

2.1. Bank of England Defines Prudential Requirements for Systemic Stability

The Development: On 10 November 2025, the Bank of England published its landmark Consultation Paper (CP) on the “Proposed regulatory regime for sterling-denominated systemic stablecoins”. This document is a “significant step” forward from the 2023 discussion paper, offering concrete policy proposals for regulating stablecoins considered systemic to the UK’s financial stability.

Deep Dive: The 40/60 Prudential Framework

The CP’s central and most material technical requirement is a proposed 40/60 split for the composition of backing assets.

40% Unremunerated Deposits: Issuers must hold a minimum of 40% of all backing assets in unremunerated (zero-yield) deposits at the Bank of England. This provides a direct link to central bank money.
60% Government Debt: The remaining 60% can be held in short-term, sterling-denominated UK government debt securities. The BoE will specify the maximum maturity of these assets in 2026.

This 40/60 proposal modifies the BoE’s 2023 discussion paper, which suggested that 100% of backing assets be held in unremunerated central bank deposits. The initial proposal received significant industry feedback, indicating that such an approach was incompatible with existing stablecoin revenue models and inconsistent with emerging international regimes.

Direct Business Model Impact: While the 40/60 split is a concession, it still directly challenges the primary revenue model of stablecoin issuers, which depends on earning interest on 100% of the reserve. The 40% zero-yield requirement positions the UK as a high-trust but potentially low-profit jurisdiction for pure-play stablecoin issuers. The BoE’s stance is that systemic stablecoins should serve as payment instruments rather than savings products, with revenue coming from payment efficiency rather than yield arbitrage.

Deep Dive: The “Step-Up” Regime and Backstop Facility

The BoE proposals include two additional, highly nuanced mechanisms:

Backstop Lending Facility: The BoE is considering providing access to a backstop lending facility for eligible, solvent, and viable systemic issuers during periods of market stress. This is a privilege typically reserved for traditional banks.
“Step-Up” Regime: For new issuers recognised as systemic at launch, a transition period is proposed. These issuers would be allowed to start with up to 95% of their backing assets in UK government debt, gradually“stepping up” to the 40% BoE deposit requirement as their stablecoin scales.

Analysis: A Phased-In Approach to Systemic Integration

These mechanisms, when viewed together, suggest a long-term strategic objective of assimilation.

The 40% unremunerated requirement serves as a significant prudential barrier, ensuring that only well-capitalised firms can operate.

However, the “step-up” regime offers a specific incentive for new issuers. A firm can launch in the UK and remain profitable during its growth phase (with 95% of its assets earning yield). The backstop facility further strengthens this proposition. This combination seems designed to attract promising issuers into the UK regulatory perimeter. Once they attain systemic importance, the 40% unremunerated requirement comes into force, effectively transforming the entity into a low-margin, high-trust public utility.

Implications for CASP Business Models:

Stablecoin Issuers: The yield-based revenue model will become less sustainable in the long term within the UK. The market is likely to consolidate around a few large, incumbent-backed issuers, such as traditional banks, which can absorb the 40% cost needed to oversee future payment rails.
Implications for Exchanges & Custodians: This advancement is a notable strategic benefit. The establishment of a BoE-regulated, prudently managed GBP stablecoin de-risks the main settlement asset for the entire UK ecosystem. It decreases counterparty risk for all CASPs (exchanges, custodians, ramps) that manage these assets, which should, in turn, encourage institutional adoption and B2B payment flows.

2.2. FCA Defines Operational and Governance Standards

The Development: The second part of the UK’s strategy was formalised on 12 November 2025, the deadline for industry responses to the Financial Conduct Authority’s (FCA) foundational Consultation Paper (CP25/25).

Technical Implications: This comprehensive CP, published on 17 September 2025, confirms how the FCA’s core, high-level rulebook will apply to all UK-authorised CASPs, including exchanges, custodians, and issuers. The FCA has reaffirmed its intention to apply most of its existing Handbook rules, typically used for traditional investment firms, directly to cryptoasset firms.

Key inclusions with the most significant business model impact are:

Senior Managers & Certification Regime (SM&CR): The full suite of SM&CR rules will apply. This imposes direct, personal accountability on senior leadership for regulatory compliance and business conduct.
Systems and Controls (SYSC): The entire SYSC framework will be applied, mandating robust governance, risk management, outsourcing (SYSC 8), and conflict of interest (SYSC 10) procedures. The FCA is also consulting on future rules to address conflicts of interest in vertically integrated crypto business models.
Operational Resilience (SYSC 15A): The FCA is explicitly extending the full operational resilience rules (SYSC 15A) to all cryptoasset firms. The FCA Consumer Panel strongly supported this proposal, noting that consumers of crypto firms face even greater operational risks than those in traditional finance, citing crypto-native risks such as private key security and smart contract vulnerabilities.

Analysis: Mandated Professionalisation

While the entire CP25/25 package represents a high compliance burden, the application of SM&CR is the most significant structural element.

This regime introduces personal liability for C-suite executives and senior managers. This liability requires a cultural shift towards traditional finance. To operate in the UK, a CASP must employ qualified, risk-averse executives (e.g., from conventional finance) who are willing and able to take on this level of personal liability. It is a structural mechanism aimed at speeding up the industry’s professionalisation.

Strategic Implication: Market Consolidation

The combination of the BoE’s capital barrier (the 40% reserve) and the FCA’s liability barrier (SM&CR) creates a substantial hurdle for new entrants and raises operational costs for existing firms.

Smaller, less-capitalised firms may lack the financial resources to cover the complex compliance costs and might be technically unable to attract executive talent willing to take on the personal SM&CR risk. This is a policy-driven push that accelerates market consolidation.

3. MAJOR DEVELOPMENT: United States – A Potential Path to Regulatory Clarity

The United States experienced two significant developments that, together, indicate a possible future for the digital asset industry. These events offer a practical legislative path to regulatory clarity and can restart operational timelines on important market catalysts.

3.1. Senate Draft Bill Proposes Path for Digital Commodity Regulation

The Development: On November 10, 2025, the U.S. Senate Committee on Agriculture, Nutrition, and Forestry released a new, bipartisan discussion draft of a crypto market structure bill.

Technical Implications:

Sponsors: The draft’s bipartisan leadership, led by Committee Chairman John Boozman (R-AR) and Senator Cory Booker (D-NJ), gives it significant credibility.
Jurisdiction: The 155-page draft proposes a clear framework for “digital commodities” and grants the Commodity Futures Trading Commission (CFTC) significant new authority and jurisdiction over the spot market for these assets. This builds upon the House-passed CLARITY Act.
Registrations: It establishes clear registration categories for digital commodity intermediaries (exchanges, brokers, dealers) and enforces customer protection standards, such as asset segregation.

Key Provision: CFTC Funding

The most important detail in the draft is a provision for CFTC funding. The draft includes a “new funding stream” for the CFTC, funded by fees on regulated crypto entities. Title II, Section 210 explicitly authorises new funding to support the CFTC’s expanded oversight activities.

Analysis: Addressing the Implementation Obstacle

The industry has long campaigned for “clarity,” with many preferring the CFTC as the main regulator for commodities like Bitcoin and Ether. Nonetheless, a major hurdle to achieving this clarity has been logistical and political. The CFTC is significantly under-resourced in comparison to the SEC and has indicated it lacks the funding to oversee a new, 24/7 spot market.

The inclusion of a funding mechanism is the key detail that makes this bill viable. It neutralises the “insufficient resources” argument.

This provision signifies the “cost of legitimacy” in the United Kingdom. For large, incumbent CASPs, this is a highly advantageous trade-off. These firms are likely to accept supervisory fees in exchange for the legal certainty necessary to attract institutional capital. This clarity is a key prerequisite for traditional financial institutions.

Implications for CASP Business Models:

Exchanges & Trading Platforms: This is a major strategic positive. It provides a clear legal framework for trading and custody of significant assets, which is a primary unlock for institutional adoption.
All CASPs: This legal clarity would catalyse a new wave of demand from traditional finance. The new fees are a predictable and acceptable cost of doing business, far outweighed by the benefit of a clear, functioning, and supervised legal framework.

3.2. Government Shutdown Ends: Regulatory Timelines Resume

The Development: The 43-day federal government shutdown ended on November 13, 2025, after the President signed a new funding bill into law.

Operational Impact:

Furloughed staff across all federal agencies, including the Securities and Exchange Commission (SEC) and the Commodities Futures Trading

Commission, were affected. The shutdown, which commenced on 1 October, haltedall non-essential rulemaking, enforcement, and application review activities. The CFTC’s contingency plan, for instance, had specified a near-total halt to market oversight.

Analysis: Resumption of Key Timetables

The operational restart of the government is a non-regulatory event with direct and immediate regulatory and market implications.

The SEC and CFTC now face a significant backlog of work. The single most-watched items in that backlog are the pending spot crypto ETF applications.

This political resolution acts as a direct, short-term bullish catalyst for the crypto market. The main uncertainty—the timing of an ETF decision—is now eliminated. The statutory deadlines are once again 'live.' The market’s immediate positive response, with Bitcoin rising above $102,000, reflects this newfound certainty. Industry focus now shifts to the expedited review of these applications.

Implications for CASP Business Models:

Exchanges & On-Ramps: These CASPs must prepare for a period of heightened volatility and volume as the market re-prices the new, shorter, and more certain timeline for ETF approvals. This is a direct catalyst for increased transaction revenue and new user acquisition.

4. ASIA-PACIFIC (Singapore): Building the Institutional Tokenisation Ecosystem

Unlike the compliance-focused, cost-driven developments in the West, Singapore demonstrated a strong, pro-innovation stance this week. The Monetary Authority of Singapore (MAS) is not only overseeing an existing market; it is also actively establishing a new one for institutional tokenisation.

The Development: During the Singapore FinTech Festival 2025 (SFF), held from November 12-14, MAS Managing Director Chia Der Jiun announced two key initiatives:

A new partnership with the UK’s FCA on “AI-in-Finance” to support the safe and responsible scaling of AI solutions.
A new pilot to trial the issuance of tokenised MAS Bills (government securities).

Deep Dive: The Tokenised RWA Infrastructure

The core announcement is the tokenised MAS Bills pilot. This is the next phase of a multi-year strategy.

The Core Infrastructure: These tokenised assets will be settled using a wholesale Central Bank Digital Currency (wCBDC).
Proven Viability: This pilot follows the successful completion of a live trial for settling interbank overnight lending transactions using the SGD wholesale CBDC, a trial which involved major banks like DBS, OCBC, and UOB.

Analysis: Transitioning from Proof-of-Concept to Production

The concept of “Real-World Asset (RWA) tokenisation” has been in a “Proof-of-Concept” (PoC) phase for years.

By using its own government securities (the ultimate “risk-free” asset) and its own central bank money (the ultimate “settlement asset”), MAS is moving tokenisation from PoC to production.

This is a top-down, government-backed initiative to establish the essential infrastructure for a new, institutional-grade tokenised financial system. In his speech, MAS Managing Director Chia Der Jiun noted that while tokenisation has “lifted off the ground,” it has not yet “achieved escape velocity”. This pilot serves as the catalyst. MAS is not waiting for the industry to resolve fragmentation; it is actively constructing the ecosystem to prevent a “fragmented landscape of sub-scale walled gardens” and is now inviting the industry to participate.

This represents the single clearest, most actionable opportunity of the week for institutional-focused CASPs.

Implications for CASP Business Models:

Institutional & B2B CASPs: This presents a clear market-entry opportunity. This new, state-sponsored ecosystem will require CASP infrastructure to operate and scale effectively.
Custodians: Will be needed to custody these new tokenised MAS Bills.
Tokenisation Platforms: Will be needed to tokenise other assets for trading against these new bills.
Exchanges: Will be needed to provide a secondary market for these tokenised assets.
On/Off-Ramps: Will be needed to connect this new tokenised ecosystem to the traditional fiat system.
Strategy Teams: Resources should be directed to understanding and integrating with this new MAS-led ecosystem, as it represents a clear, regulator-blessed path to institutional-grade operations in APAC.

5. Strategic Recommendations & Weekly Impact Matrix

Based on the preceding analysis, the following are actionable recommendations for executive teams.

5.1. Actionable Strategic Recommendations

For Strategy & Executive Leadership:

Re-evaluate Stablecoin Strategy: The revenue model based on yields is no longer feasible in key jurisdictions like the UK. All upcoming stablecoin projects must shift to a payment-flow and transaction fee-based approach. A quick assessment is necessary to see if the “high-trust” brand justifies the 40% unremunerated capital expense.
Initiate a Strategic M&A Review: The new compliance and prudential costs arising from the FCA’s SM&CR will render smaller, tech-focused CASPs non-viable. The corporate development team should be tasked with identifying and acquiring firms that have strong technology but require additional capitalisation before this trend accelerates.
Prioritise APAC Institutional by swiftly allocating R&D and B2B resources to the Singapore RWA ecosystem. This presents a government-backed “build-with-us” opportunity that offers a clear, high-growth trajectory for institutional and B2B product lines.

For Legal & Compliance Leadership:

Quantify SM&CR Liability: For all UK operations, Legal must map all senior managers to their personal responsibilities under the Senior Managers & Certification Regime and ensure all D&O insurance and indemnity provisions are updated. This is a non-negotiable cost of UK operations.

For Exchange & Product Leadership:

Prepare for ETF-Driven Inflows: The end of the U.S. government shutdown restarts the ETF catalyst clock. All exchange infrastructure (matching engines, custody, support) must be stress-tested now to handle the anticipated surge in transaction volume and new user signups.
Model for U.S. “Cost of Clarity”: The U.S. Senate bill indicates a probable path forward: CFTC supervision funded by industry fees. Product and finance teams must begin modelling this new "supervisory fee” as a cost of doing business in the U.S. The firm should actively support this legislation as the key to institutional market access.

5.2. Table: Weekly Regulatory Development & Impact Matrix

Jurisdiction / Regulator	Development (Date)	Key Technical Requirement	Primary CASP Business Model Impact	Strategic Implication (Threat/Opportunity)
United Kingdom (BoE)	Systemic Stablecoin CP (Nov 10)	40% unremunerated (zero-yield) reserveat the central bank.	Kills the yield-based revenue model for stablecoin issuers.	THREAT: Issuance in the UK becomes a low-profit utility. OPPORTUNITY: De-risks GBP stablecoins, making them a superior settlement asset for all other CASPs.
United Kingdom (FCA)	CP25/25 Deadline (Nov 12)	Application of SM&CR (personal liability)and SYSC (operational resilience).	Dramatically increases compliance cost and personal liability for senior management.	THREAT: Drives market consolidation by creating a high barrier to entry. Increases compliance costs and personal liability.
United States (Senate)	Bipartisan Draft Bill (Nov 10)	Grants CFTC jurisdiction over digital commodities AND provides a new funding stream for the CFTC.	Provides a viable path to legal clarity for U.S. institutional adoption.	OPPORTUNITY: A primary catalyst for U.S. institutional adoption. The “cost” (fees) is offset by the “benefit” (market clarity).
United States (Gov’t)	End of 43-Day Shutdown (Nov 13)	SEC and CFTC staff return to work, restarting all regulatory processes.	Resumes the statutory clocksfor market-moving decisions, most notably spot crypto ETFs.	OPPORTUNITY: A short-term catalyst. Removes timing uncertainty and accelerates a high-volume market event.
Asia-Pacific (MAS)	SFF 2025 Announcements (Nov 13-14)	Pilot for tokenised MAS Bills (gov’t securities) settled via a wholesale CBDC.	Creates the foundational, state-sponsored rails for an institutional-grade RWA tokenisation market.	OPPORTUNITY: A significant new market opportunity. A “greenfield” for B2B/institutional CASP infrastructure.