Digital Currencies Governance Group (DCGG): November Newsletter

European Union

Digital Currencies Governance Group (DCGG) Publishes Whitepaper on Decentralised Finance and the Evolution of Staking: DCGG is excited to announce the first release of our series of whitepapers, titled “Decentralised Finance and the Evolution of Staking”, offering an in-depth look into staking as a critical function within the decentralised finance (DeFi) ecosystem.

DeFi is emerging as a new financial system, using distributed ledger technology (DLT) to enable automated services like lending, custody, and settlement, with staking as a core mechanism for security, liquidity, and governance. Staking has advanced with innovations like re-staking and liquid staking but is often misunderstood in policy circles as an investment rather than a technical function for securing protocols. DCGG’s whitepaper calls for public-private collaboration to support proof-of-stake experimentation and foster connections between DeFi and traditional finance.

Through this initiative, we aim to bridge knowledge gaps and offer a comprehensive insight into the evolving role of staking in DeFi. By promoting informed policy discussions, we strive to support strategies that safeguard innovation while ensuring a sustainable and resilient future for the DeFi ecosystem.

Download the full whitepaper to explore staking in DeFi here. Stay tuned for our second whitepaper on the use of Blockchain in renewable energy in January 2025!

Digital Currencies Governance Group (DCGG) Hosts a Webinar on Decentralised Finance and the Evolution of Staking: On November 26, DCGG hosted a webinar to unveil the key findings from our latest whitepaper, “Decentralised Finance and the Evolution of Staking.”

In this session, our Advisory Member and digital assets regulation expert Martinho Lucas Pires presented a deep-dive into the importance of staking within DeFi, examining its role in enhancing security and liquidity, as well as its regulatory complexities. We outlined how staking compares to similar mechanisms and its broader implications for the DeFi ecosystem and provided key policy suggestions for ensuring a robust and proportionate regulatory framework.

In case you missed it, here is a recording of this insightful webinar session!

Digital Currencies Governance Group (DCGG) Hosts a Policy Discussion on Crypto and Blockchain in Brussels: On November 12,?DCGG hosted a policy panel debate titled "Crypto & Blockchain - Quo Vadis?", co-hosted with Stefan Berger MEP and featuring experts Dr. Joachim Schwerin from the European Commission, and Seth Hertlein from Ledger, moderated by J?rn Jakob R?ber , DCGG’s Head of EU Policy.

The discussion explored Europe’s regulatory landscape for crypto, focusing on the opportunities and challenges of MiCA implementation. While MiCA offers crucial clarity, panelists highlighted the compliance hurdles it poses, particularly for smaller firms. A key insight was the consensus that Europe’s global competitiveness hinges on fostering innovation and growth in the sector. DCGG extends a heartfelt “thank you” to our speakers and participants for this crucial, engaging and timely discussion.

United Kingdom

The House of Lords Financial Services Regulation Committee closes its inquiry into the FCA and PRA Secondary Growth and Competitiveness Objective: On November 29, the re-appointed House of Lords Financial Services Regulation Committee closed its call for evidence on the secondary international competitiveness and growth objective mandated to the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). Alongside the written inquiry, the FSRC held several oral evidence sessions with key stakeholders across the financial services sector, discussing their perspective on the UK’s international competitiveness and growth in the context of the FCA and PRA’s regulatory remit. The oral evidence sessions are scheduled to continue during the month of December.

DCGG welcomed the opportunity to share views with the FSRC with regard to the FCA and its approach to regulating the crypto-asset industry in the UK. Against the backdrop of existing (FinProms) and forthcoming (stablecoin) frameworks, we expressed our concerns that the lack of detailed guidance, disproportionate compliance burdens and low MLRs authorisation rates for crypto firms can negatively affect the growth of the UK market. To address this, we extended recommendations to the FSRC for more proportionate regulation, clear guidance and metrics and enhanced engagement with the industry.

Interested parties may follow the progress of the inquiry at: https://committees.parliament.uk/work/8433/fca-and-pras-secondary-competitiveness-and-growth-objective/?

Financial Conduct Authority Publishes a Roadmap on its Planned Policy Publications on Crypto: On November 26th, the Financial Conduct Authority (FCA) shared an update on its approach to regulating cryptoassets, publishing a Crypto Roadmap detailing upcoming policies and consultations.

Key takeaways include:

• Q4 2024: The FCA will issue discussion papers on admission/disclosures (e.g., processes, liability, and due diligence) and market abuse (e.g., systems, controls, and insider information).
• Q1/Q2 2025: Discussion papers on trading platform rules, intermediation, lending, staking, and cryptoasset prudential considerations. In addition, the anticipated consultation papers on stablecoins (backing assets, redemption), custody (recordkeeping, reconciliations, third-party use), and a new prudential sourcebook (capital, liquidity, and risk management) are also expected at the beginning of the year.?
• Q3 2025: Consultation papers on conduct and firm standards for all Regulated Activities Order (RAO) activities, focusing on systems, controls, operational resilience, financial crime, Consumer Duty, complaints, conduct , governance (including Senior Managers and Certification Regime), admissions and disclosures, and market abuse, building on earlier discussion papers.
• Q4 2025/Q1 2026: Further consultation papers on trading platforms, intermediation, lending, staking, and the prudential sourcebook, building on discussions from earlier in 2025.

The final rules and policy statements are expected to be published in 2026, with the regulatory regime entering into force at a later date. Ahead of a big year for the crypto-asset sector in the UK, stay tuned for DCGG’s policy papers and initiatives!

Economic Secretary to the Treasury confirms new stablecoin and staking regulations will be unveiled in early 2025: On November 21 at the Tokenisation Summit 2024, ahead of the FCA publications earlier this week, the Economic Secretary to the Treasury Tulip Siddiq revealed that the UK government plans to introduce a unified regulatory framework for cryptoassets in 2025. The UK government confirmed that stablecoins will not be brought into payments regulation to avoid disproportionate rules, and a new regulated activity will cover stablecoin issuance and custody, aligned with international standards.?

In addition, staking will not be treated as a collective investment scheme, a decision welcomed for its practical approach. Full regulatory treatment of staking will be addressed under the full cryptoasset regulatory framework, which will be published all at the same time.

The UK’s commitment to innovation and supporting the digital asset industry remains strong, with detailed consultations and regulatory updates expected early next year.