Global Regulatory Shifts Signal Maturing Crypto Landscape: Russia Embraces Banks, US Debates DeFi, Europe Expands ETPs

Global regulatory bodies and financial institutions are navigating the evolving cryptocurrency landscape with significant policy shifts and product launches. From Russia's move to allow banks to handle digital assets to the U.S. grappling with decentralized finance regulations and Europe expanding investment products, the crypto world is witnessing a period of significant development and adaptation.

Key Takeaways

Russia is preparing to permit banks to engage in cryptocurrency operations under strict oversight, acknowledging the widespread use of digital assets among its citizens.
A leaked U.S. Senate Democratic proposal concerning decentralized finance (DeFi) has drawn sharp criticism from industry insiders, who warn it could stifle innovation.
European markets are seeing increased institutional adoption, with WisdomTree launching a physically backed Stellar Lumens ETP.
Major financial players like Citi are advancing plans for crypto custody services, signaling a growing acceptance of digital assets within traditional finance.

Russia's Pragmatic Approach to Crypto

Russia is signaling a significant shift in its stance on cryptocurrencies, moving towards formal integration into its financial system. Officials acknowledge that approximately 20 million Russians actively use digital assets, a reality the government can no longer ignore. Deputy Finance Minister Ivan Chebeskov stated the need for domestic infrastructure to protect users and secure economic benefits. Figures from the Bank of Russia reveal that Russian citizens held an estimated 827 billion rubles (about $10.15 billion) in cryptocurrency exchange wallets by March 2025, a 27% increase year-over-year. Bitcoin, ether, and stablecoins like USDT and USDC represent the majority of these holdings. The Bank of Russia is also preparing to allow banks to operate in the crypto sector, albeit with stringent capital limits and reserve requirements to prevent crypto from becoming a dominant business line. This marks a departure from previous proposals that suggested restricting crypto transactions to "highly qualified investors."

U.S. Regulatory Concerns Over DeFi

In the United States, a leaked document outlining a potential U.S. Senate Democratic position on regulating decentralized finance (DeFi) has sparked significant concern within the crypto industry. The proposal suggests that entities facilitating customer interactions in DeFi operations would need to register with the SEC or CFTC and be regulated as brokers. Industry experts, including Jake Chervinsky, chief legal officer at Variant, and Summer Mersinger of the Blockchain Association, argue that such measures would effectively ban DeFi and related applications in the U.S., driving development overseas. While the proposal aims to allow regulators to hold accountable those involved in DeFi front-ends, it also seeks to exempt pure, non-profit-generating protocols deemed "sufficiently decentralized." This comes as the House of Representatives has already passed its own digital asset market clarity legislation, urging the Senate to adopt a similar framework.

European Expansion of Crypto Investment Products

Europe continues to be a hub for institutional crypto investment products. WisdomTree has launched a physically backed exchange-traded product (ETP) tied to Stellar Lumens (XLM) across several European exchanges, including the SIX Swiss Exchange and Euronext. With a management expense ratio of 0.50%, it is positioned as one of the lowest-cost physically backed lumens ETPs in Europe. This launch follows WisdomTree's earlier introduction of a physically backed bitcoin ETP in 2019. The firm highlights Stellar's focus on cross-border payments and tokenized asset issuance, noting its energy-efficient Stellar Consensus Protocol and recent smart contract capabilities. This move underscores a growing trend of traditional asset managers offering regulated access to digital assets for European investors.

Traditional Banks Eyeing Crypto Custody

Major traditional financial institutions are increasingly preparing to offer cryptocurrency custody services. CNBC reports that Citi is planning to launch crypto custody services in 2026, allowing the bank to hold digital assets like bitcoin and ether for clients. This initiative has been in development for two to three years, with Citi exploring both in-house solutions and third-party partnerships. The move aims to provide institutional clients with a regulated avenue for storing crypto, a crucial piece of infrastructure for traditional investors. Citi's digital asset exploration also includes stablecoin issuance and investments in blockchain-related startups, signaling a broader commitment to integrating digital assets into its service offerings.