Crypto and Sanctions: What Regulators Expect in 2025 🚀

In 2025, the intersection of cryptocurrency and sanctions compliance is under intense regulatory scrutiny. Governments worldwide are balancing innovation with enforcement, tightening rules to prevent digital finance from being used to circumvent sanctions regimes.

Whether you operate a crypto exchange, issue stablecoins, or provide blockchain services, understanding global expectations is critical.

1️⃣ United States: Innovation with Vigilance

Executive Direction & Legislative Framework

• January 2025: Executive Order 14178 revokes prior digital asset directives and freezes central bank digital currency (CBDC) initiatives.

• A federal task force is tasked with proposing a national digital asset regulatory framework within 180 days.

GENIUS Act for Stablecoins

• July 18, 2025: Establishes nationwide regulation for stablecoins, requiring 1:1 backing with USD or low-risk assets.

• Dual federal-state supervision enhances transparency and consumer protection.

Sanctions Enforcement

• OFAC continues monitoring and adding addresses linked to sanctioned actors.

• Crypto issuers and exchanges must perform diligent monitoring, even under an innovation-friendly administration.

2️⃣ United Kingdom: Phased Regulation & Enforcement

FCA Enforcement

• Specialized teams and extended authorisation timelines (avg. 317 days) ensure AML standards compliance.

Roadmap to Full Crypto Regulation (2025–2026)

• Q1–Q2 2025: Guidance on stablecoins, custody, liquidity, and risk management.

• Q3 2025: Conduct, governance, and SMCR application.

• Late 2025–2026: Final rules on trading platforms, intermediaries, lending, and staking.

OFSI Expectations

• Freeze and report assets linked to designated persons.

• Detect suspicious wallet activity and microtransactions, and file SARs with OFSI and the National Crime Agency.

3️⃣ European Union: MiCA Implementation

• Fully in force since December 2024, MiCA mandates licensing for crypto service providers (CASPs).

• Requirements include governance, disclosure, investor protection, and enhanced sanctions due diligence.

• Stablecoin issuers must ensure transparency and compliance, preventing sanctions breaches via opaque fund management.

4️⃣ UAE: VARA’s Granular Approach

VARA Rulebook 2.0 (June 19, 2025)

• Dynamic risk assessments every three months, covering anonymous-enhancing crypto and AI-driven services.

• Mandatory instant sanctions screening and eight-year audit trails in line with FATF & UN mandates.

• Real-time suspicious activity reporting (SAR) within 48 hours.

Licensing & Activity-Specific Frameworks

• Eight virtual asset activities regulated, with tailored compliance requirements.

• Custody: multi-signature wallets, insured vaults, proof-of-reserves, and board-level oversight.

• Lending & borrowing: collateral revaluation, LTV limits, margin enforcement, borrower notifications.

• Marketing: strict transparency and disclaimers, regulator approval for incentives.

Enforcement & Penalties

• Public warnings, cease-and-desist orders, fines up to AED 50 million or 300% of illicit profits.

5️⃣ Global Flashpoints

Australia: AUSTRAC audits Binance Australia for AML/CTF compliance gaps.

Asia-Pacific:

• China bans decentralized crypto but explores yuan-backed stablecoins.

• Japan reclassifies crypto as regulated financial products.

• Hong Kong develops stablecoin-specific legislation and sandbox programs.

• South Korea sanctions unregistered exchanges like BitMEX & KuCoin.

OECD CARF:

• Crypto-Asset Reporting Framework (CARF) mandates user tax IDs and cross-border transaction reporting.

• EU implementation by 2026; partial US adoption possible.

📌 Key Takeaways for 2025

1. Robust AML & Sanctions Frameworks: Real-time monitoring, blockchain analytics, and transaction scanning are mandatory.

2. Stablecoin Oversight: Must be fully asset-backed, with issuer due diligence and transparent operations.

3. Reporting & Transparency: Mandatory SARs, freezing, and reporting to regulators.

4. Global Harmonization: Converging standards across MiCA, GENIUS Act, CARF, Travel Rule, etc.

5. Institutional & Tax Compliance: Investor protection, tax reporting, and alignment with banking regulations.

Bottom Line:

Crypto firms must treat sanctions compliance as a core operational strategy, not an afterthought. Success in 2025 comes to those who embed risk governance, regulatory alignment, and proactive compliance into the heart of their business.

Ready to Strengthen Your Compliance Strategy?

At Comply Sphere Advisory, we help crypto businesses, exchanges, and financial institutions navigate this fast evolving regulatory landscape, bridging the gap between innovation and global compliance expectations.

📩 Contact us today to build a sanctions-ready compliance framework that positions your business for growth and resilience in 2025 and beyond.