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Potential Impacts on CASP Business Models from Regulatory Developments for (Week Ending 16 January 2026

Executive Summary


The regulatory landscape for the week ending 16 January 2026 is defined by a sharp strategic divergence: Operational hardening in the West versus aggressive market restructuring in the East.


  • Europe & UK: Regulators have closed the door on jurisdictional arbitrage for infrastructure. The UK-EU DORA pact creates a unified supervisory front, while the G7’s Post-Quantum roadmap introduces a new, existential technology risk for CASP custodians.

  • APAC & Middle East: This region presents the most volatile mix of opportunity and risk. Japan (tax cuts) and Dubai (listing speed) are removing friction to capture volume, while India (Live KYC) has erected severe barriers that will spike Customer Acquisition Costs (CAC).

  • Americas: The US SEC signals a pivot toward “sensible enforcement” with new leadership, unlocking primary issuance revenue, though the threat to stablecoin yield models remains legislative.


Top 3 Material Impacts:


  1. Revenue Catalyst (Japan): The proposal to slash crypto taxes from ~55% to 20% is a massive potential volume driver for retail.

  2. Liability Shift (Dubai): Listing speed increases, but the Board now holds 100% liability for token failures, necessitating new risk frameworks.

  3. Tech Obsolescence (Global): The G7 Quantum roadmap renders current signing algorithms (ECDSA) “legacy,” mandating a decade of high R&D spend.


1. Material Impacts on Business Models


A. Structural & Existential Risks (Long-Term)


  • Post-Quantum Transition (Global/G7): The publication of the G7 Cyber Expert Group’s roadmap (13 Jan) escalates quantum decryption from a theoretical to an operational risk. Unlike banks, which use cryptography to protect messaging, CASPs use it to verify asset ownership.

    • Impact: Critical. Protocols relying on ECDSA or similar algorithms risk becoming uninsurable or regulatorily “unsafe” well before the 2035 deadline.

    • Action: CISO to initiate an immediate “Cryptographic Agility” audit.

  • “Contract > Code” Mandate (USA): The SEC’s POLARIS 3.0 Framework (12 Jan) explicitly subordinates smart contract immutability to legal terms, demanding technical “admin keys” for freezing/reversal.

    • Impact: High. This creates an existential conflict for “pure” DeFi protocols. Business models relying on “code-is-law” governance are now effectively non-compliant in the US market.


B. Operational Liability & Governance


  • Liability Transfer (Dubai/DIFC): The DFSA’s abolition of the “Recognised List” in favour of firm-led self-certification (12 Jan) transfers 100% of the liability for token failure to CASPs.

    • Impact: High. The speed-to-market benefit is offset by severe legal risk. Listing Committees must completely overhaul “Suitability Assessments” to withstand regulatory scrutiny in the event of a token collapse.

  • Dual-Hub Oversight (EU/UK): The MoU between UK regulators and European ESAs regarding DORA (14 Jan) eliminates regulatory arbitrage for infrastructure.

    • Impact: Medium. CASPs with dual London/EU operations must unify their Third-Party Risk Management (TPRM). A failure in a UK data centre will now trigger immediate EU supervisory intervention.


C. Market Access Barriers


  • “Live KYC” Mandate (India): The FIU’s new guidelines (15 Jan) requiring liveness detection and geo-tagging create significant friction.

    • Impact: High. The “barrier to entry” for the Indian market has risen significantly. Compliant CASPs face higher onboarding costs and potential user drop-off due to intrusive data requirements.


2. Material Impacts on Revenue Generation


A. Revenue Opportunities (Growth Vectors)


  • Tax-Driven Retail Revival (Japan): The FSA’s proposal (14 Jan) to reclassify crypto under FIEA and lower taxes from ~55% to a flat 20% is a massive commercial catalyst.

    • Forecast: High Positive. If passed, this is expected to unlock dormant Japanese retail capital. CASPs should prepare “Japan Re-entry” strategies to capture the anticipated volume surge.

  • Token Issuance Revival (USA): The SEC’s “MegPrime” No-Action Letter (15 Jan) provides a replicable template for unregistered token sales under strict “safe harbour” conditions.

    • Forecast: Positive. Reopens the US primary market revenue stream for advisory and launchpad services that can mirror the specific facts of the letter.

  • African Market Efficiency (EU/FATF): The removal of South Africa and Nigeria from the EU’s “High-Risk” list (effective late Jan 2026) reduces Enhanced Due Diligence (EDD) requirements.

    • Forecast: Positive. Lowers Customer Acquisition Cost (CAC) and improves conversion rates in two high-growth emerging markets.


B. Revenue Threats (Contraction Risks)


  • Stablecoin Interest Ban (USA): The stalled Digital Asset Market Clarity Act (15 Jan) includes provisions that ban yield on stablecoins.

    • Forecast: Negative. If passed, this would eliminate a core revenue driver for exchanges and lending platforms (pass-through interest)s.

  • Wholesale Displacement (Global): Project mBridge (BIS) reaching $55B volume with 95% e-CNY settlement signals a shift in wholesale cross-border flows.

    • Forecast: Negative. Central bank rails are beginning to cannibalise the B2B cross-border payment market share previously held by private stablecoins (USDT/USDC).

  • Retail Product Restrictions (UK): The FCA’s criticism of “complex” ETP sales (12 Jan) signals imminent restrictions on high-margin crypto derivatives for retail users.

    • Forecast: Negative. Expect reduced volumes in leveraged products as “appropriateness tests” become more exclusionary.


3. Regional & Sector Digest

Region

Key Development

Materiality

Action Required

Europe

MMF Stress Tests (ESMA): Stricter liquidity rules for funds backing stablecoins.

Operational

Treasury to verify MMF partner compliance to avoid T+0 redemption failures.

UK

FMSB Standards: New workstream for stablecoins in wholesale markets.

Strategic

Institutional CASPs must engage with FMSB to shape settlement standards.

USA

Leadership Change: Tzur/Morrell appointed to SEC Enforcement.

Legal

Review pending subpoenas; opportunity to negotiate “sensible” settlements.

Thailand

Inactive Assets: SEC consultation on transferring “zombie accounts.”

Cost

Ops to assess the volume of inactive accounts eligible for offloading.

Canada

Capital Rules (OSFI): Banks capped at 1-5% crypto exposure.

Banking

Treasury to re-engage Canadian banking partners for custody partnerships.

4. Recommended Board Actions


  1. CEO: Commission a “Japan Growth Strategy” based on the 20% tax scenario to capture first-mover advantage.

  2. CRO: Sign off on new Token Suitability Policies (Dubai) to manage the new self-certification liability.

  3. General Counsel: Analyse the “MegPrime” No-Action letter for US issuance opportunities and prioritise lobbying against the US stablecoin interest ban.

  4. CTO: Audit all smart contracts for POLARIS 3.0 compliance (admin keys) and implement Liveness Detection SDKs for India.



 
 
 

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