Six Global Crypto Policy Changes Shaping the Market This Week

Introduction: Crypto in a Changing Regulatory Landscape

Cryptocurrency adoption continues to grow worldwide, prompting governments to respond to its potential impact on financial systems and economic stability. This week, six major policy developments have influenced the crypto industry, some creating hurdles for innovation, others opening new opportunities.

From ETF approvals in the U.S. to regulatory frameworks in Africa and evolving rules in Europe, the global crypto market is experiencing a policy convergence that could redefine how digital assets operate.

1. U.S. Government Shutdown Stalls ETF Approvals

The ongoing U.S. federal government shutdown, caused by a budget impasse between Democrats and Republicans, has stalled many regulatory processes, including cryptocurrency ETF approvals. The Securities and Exchange Commission (SEC), responsible for evaluating and regulating most crypto-related financial products, is operating with minimal staff.

As a result, pending decisions for ETFs, including Canary Capital's Litecoin spot ETF, have seen no progress or public commentary. The initial filing deadline of October 3 passed without action.

However, there is some optimism in the crypto industry following the confirmation of Jonathan McKernan as Deputy Secretary for Domestic Finance at the U.S. Treasury on October 7. McKernan is perceived as crypto-friendly, opposing government moves that could indirectly hinder digital asset adoption.

2. UK Lifts Ban on Crypto Exchange-Traded Notes (ETNs)

The Financial Conduct Authority (FCA) in the UK has lifted restrictions on cryptocurrency Exchange-Traded Notes (ETNs), allowing retail investors to participate once again.

ETNs are debt instruments that enable investors to gain exposure to cryptocurrencies without owning the underlying assets. The FCA had prohibited ETNs in 2021, citing concerns about risk and market maturity. Its latest announcement signals a shift toward more mainstream acceptance of crypto products, though derivative crypto products remain restricted for retail investors.

3. Luxembourg Sovereign Wealth Fund Allocates to Bitcoin ETF

Europe is also seeing notable institutional moves. Luxembourg’s Sovereign Wealth Fund (SWF) announced it has allocated 1% of its assets to a Bitcoin ETF, approximately $9 million, as part of a total portfolio of €764 million (~$888 million).

Finance Minister Bob Kieffer emphasized that the 1% allocation balances a conservative investment strategy with recognition of Bitcoin’s long-term potential. This move highlights that even traditionally risk-averse government funds are acknowledging the strategic value of digital assets.

4. Kenya Passes Cryptocurrency Law for Virtual Asset Service Providers

In Africa, Kenya is taking a proactive approach to cryptocurrency regulation. The Virtual Asset Service Providers (VASP) Bill was passed by parliament this week and awaits presidential assent.

The law provides a clear legal framework for exchanges, brokers, wallet providers, token issuers, and miners, while emphasizing consumer protection and innovation balance.

Chebet Kipingor, Business Operations Manager at Busha Kenya, described the bill as a signal that Kenya is ready to embrace a digital future led by innovation rather than fear.

5. European Union Aims to Centralize Crypto Oversight

Across Europe, the European Securities and Markets Authority (ESMA) is moving to expand its regulatory scope over cryptocurrency exchanges and service providers.

Currently, oversight is handled by national regulators, which has led to fragmented enforcement of the Markets in Crypto-Assets (MiCA) regulation. ESMA’s plan to centralize supervision is intended to create a more unified, competitive European crypto market, addressing concerns from France, Austria, and Italy about inconsistent implementation.

6. UK Central Bank Softens Stance on Stablecoins

The Bank of England (BoE) is reportedly reconsidering limits on corporate stablecoin holdings.
Currently, individual holdings are capped at £20,000, and corporate holdings at £10 million, designed to prevent systemic risk. However, firms operating exchanges and other digital asset services argue these caps are restrictive.

BoE Governor Andrew Bailey is exploring ways for stablecoins to coexist with central bank digital currencies (CBDCs), reflecting a more flexible approach that could support liquidity and innovation.

Conclusion: Cryptocurrency Enters a Period of Policy Convergence

From U.S. administrative delays to proactive frameworks in Kenya, Luxembourg, and the UK, this week’s developments indicate a broader trend:

Governments worldwide are moving from reactive to collaborative approaches to crypto regulation.

The adoption of Bitcoin ETFs, stablecoin regulatory adjustments, and legal frameworks for VASPs signal that digital assets are increasingly integrated into global economic strategies.

The next few months could be critical in defining the regulatory environment for crypto, with innovation and compliance coexisting more harmoniously than ever before.