Regulatory Round Up – 2025 in Review

Overview

2025 has been another action-packed year for financial services regulators. In this round up we highlight six key developments from the UK, the EU, the US, the GCC (the Gulf Cooperation Council, comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates), Hong Kong SAR and Australia that are of relevance to our aosphere online legal subscription services focusing on cross-border distribution topics.  We also look ahead to what 2026 is likely to bring.

1. Further reforms take shape in the UK

HM Treasury and the FCA have been particularly busy as the UK continues to reform the framework for financial services regulation. Some of the changes/proposals of note include:

• the UK finalising the rules for a new, domestic regime for public offers and admission to trading over the course of 2025, with the regime taking effect in January 2026. Under the new regime, making an offer of relevant securities to the public in the UK will be prohibited unless the securities are admitted to a regulated market or a primary multilateral trading facility, the offer is made through a public offer platform or an exemption applies. The exemptions are similar to those under the previous public offer regime but include for example certain changes to the threshold levels
• the FCA releasing a package of papers relating to the UK’s retail investment regime in December, including final rules for the new consumer composite investment (CCI) regime.  The CCI regime is replacing the PRIIPs regime and the UCITS disclosure requirements with a single retail disclosure framework tailored for UK consumers and markets. Compliance with the CCI regime will be mandatory from 8 June 2027. From April 2026, firms will be able to opt to comply with the previous regime or the new CCI regime
• implementation of the UK- Switzerland Berne Financial Services Agreement (the BFSA) has continued. The BFSA provides for mutual recognition of domestic laws and regulations and potential alternative access routes for Swiss and UK firms looking to access the other market. In July, the government published legislation to implement the BFSA, which is intended to come into force on 1 January 2026, and in November guidelines were published by the FCA/PRA and FINMA

2. EU - Implementation of CRD 6, AIFMD 2 and SFDR reform

We have been busy following the implementation of AIFMD 2 and CRD 6 across Member States.

• AIFMD 2 introduces EU-wide rules for AIFMs regarding loan origination, liquidity management tools for open-ended AIFs, delegation arrangements, supervisory reporting and substance requirements. With less than six months to go until the implementation deadline, some Member States such as Germany, Luxembourg and the Netherlands, are further down the implementation track having already published drafts of their implementing legislation, whereas others, such as Belgium, France, Italy and Spain, have yet to do so. Our AIFMD 2 implementation tracker helps you keep on top of these developments and in light of AIFMD 2's fast-approaching implementation deadline, AIFMs are advised to commence their operational preparation as soon as possible to ensure timely alignment of their frameworks, documentation and processes with AIFMD 2, if they have not already done so. In addition, note that whilst the majority of the changes will apply to EU authorised AIFMs, there will be elements of AIFMD 2 that will also apply to non EU AIFMs

• similarly, the clock continues to tick on the deadline for implementation for CRD 6 into Member State national laws, which will see the introduction of a requirement for non-EU entities to establish a regulated third-country branch when carrying on certain core banking activities, subject to certain exemptions, with effect from 11 January 2027. Our CRD 6 implementation tracker provides an update on implementation progress by Member States and indicates certain areas where we are seeing divergences in approach.  As with AIFMD 2, some Member States such as Denmark, Germany, Luxembourg, the Netherlands and Italy have published their implementing legislation or have even passed such bills into law but progress has, to date, been slow for most other Member States.  For those Member States with existing banking monopoly rules such as Germany and France, the effects of the third-country branch requirement will be less pronounced as for other EU jurisdictions, but nevertheless, affected lenders should assess on a case-by-case basis whether they will need to either cease providing core banking services into the EU on a cross-border basis, establish an authorised third-country branch, provide such services through a different EU-based operation (a non-bank entity or CRD-authorised EU subsidiary) and/or seek to rely on exemptions
• finally, in November, the Commission announced that it had adopted a proposed regulation making changes to the current Sustainable Finance Disclosure Regulation (SFDR).  In a related press release, the Commission explained that the current regime results in disclosures that are too long and complex and that SFDR has effectively been used as a de facto labelling system, causing confusion (particularly for retail investors) and increases the risk of greenwashing and mis-selling. The proposed regulation will next be submitted to the European Parliament and Council of the EU for consideration

3. US – a new era for crypto

The Trump administration in the United States promised to “make the US the crypto capital of the world”.  This kicked off with the formation of a new SEC crypto task force with the aim of developing a comprehensive and clear framework for crypto assets. Additionally, there was a shift in attitude from the SEC from an enforcement heavy approach to one favouring regulatory clarity.  Other key developments include:

• in June, the US Senate passed the GENIUS Act, followed by the House in July.  The GENIUS Act proposes a federal licensing and supervisory framework for payment stablecoins and their issuers. In September, the US Department of the Treasury issued an advance notice of proposed rulemaking seeking public comments on the implementation of the GENIUS Act.  Following an extension, comments were requested on or before 4 November
• in July, the Working Group on Digital Assets Markets released a report including recommendations to strengthen US leadership in digital finance technology.  Following this, the SEC launched “Project Crypto” – an SEC-wide initiative to modernise securities rules and to implement recommendations made in the working group report.  There have also been a number of initiatives illustrating coordination between the SEC and the CFTC to promote trading venue choice and optionality for market participants
• the CLARITY Act, which aims to establish clear, functional requirements for digital asset market participants, including clarifying the jurisdictions of the SEC and the CFTC, is also progressing. This has been passed by the House but has faced challenges in the Senate with a number of unresolved issues. Whilst progress stalled somewhat in late 2025, recent signals indicate that there will be renewed focus on passing the CLARITY Act in early 2026

4. Increase in fund passporting and mutual recognition arrangements

• in the Middle East, 2025 saw the implementation of the GCC fund passporting regime in Saudi Arabia, Kuwait and Bahrain.  The GCC fund passporting regime aims to streamline the registration and promotion of investment funds across the GCC countries that are signatories to the regime.  Eligible funds are those established and licensed in GCC jurisdictions and can include public or private investment funds already registered in its country of establishment. The  remaining GCC jurisdictions (UAE, Qatar and Oman) are expected to release implementing regulations by early 2026
• in APAC, Hong Kong SAR continued to enter into mutual recognition of funds arrangements, with an MoU entered into between the SFC and the Central Bank of Ireland in May and between the SFC and the SCA of the UAE in September.  These add to the growing list of mutual recognition of funds schemes entered into by the SFC  

5. Clarity at last for foreign financial services providers in Australia?

• in November, the Australian government introduced a bill to the Australian Parliament containing new exemptions for foreign financial services providers from the requirement to obtain an Australian financial services licence.  The bill is very similar to a previous bill that had lapsed when an election was held in Australia in May.  The bill is intended to replace the existing relief and implement a clear and comprehensive exemption regime.  The new regime is due to commence 12 months after receiving Royal Assent, subject to its passage through Parliament
• in December, ASIC announced that it is extending the licensing relief for foreign financial services providers to hold an Australian financial services licence for a further 12 months, to 31 March 2027.  This was widely expected whilst the new legislation is being considered

6. Focus on enforcement: regulator actions against digital asset firms and finfluencers

• the closure of crypto-related enforcement actions by the SEC in the United States has come at a time where we’ve seen an uptick in enforcement actions against digital asset firms elsewhere.  EU regulators have been quick to issue warnings and website blackouts against firms operating without the appropriate permissions.  We’ve also seen regulators from the UAE, Hong Kong and India commencing various enforcements. Examples of recent actions across the globe can be found in our Cross-border distribution: examples of penalties for non-compliance article
• in June, regulators from Australia, Canada, Hong Kong, Italy, United Arab Emirates, Austria and the United Kingdom took part in a global week of action against unlawful finfluencers.  An increasing challenge for regulators relates to cross-jurisdictional issues where finfluencers are involved.  For example, Hong Kong’s SFC pressed an overseas virtual asset trading platform to stop targeting the Hong Kong public by terminating affiliate arrangements with finfluencers, as well as engaging with social media platforms to remove social media posts and profiles impersonating public figures and promoting unauthorised investment products. Read our Focus on Finfluencers article for more information and analysis

Coming down the track

To conclude, we thought it would be helpful to set out some of the changes we expect to see in 2026: 

• the UK should expect changes as the new public offer and retail disclosures regimes become embedded as discussed above. Further developments are also expected as the UK continues to reshape its regulatory framework
• in the EU, as well as the ongoing implementation of AIFMD 2, CRD 6 and the reform of the SFDR:
  • December saw the European Commission adopted its “market integration package” with the aim of creating a more integrated, efficient and competitive financial system. The package contemplates a number of potentially significant changes impacting cross-border distribution, including harmonised marketing communication rules, automatic passporting and changes to the UCITS and AIFMD passporting rules, removal of the UCITS KIID provision and an enhanced supervisory role for ESMA. The package still needs to be negotiated between the European Commission, the European Parliament and the Council and so is subject to change
  • the Council of the European Union has published conclusions on simplifying the European Union’s financial services regulation and has asked the European Commission to swiftly put forward ambitious simplification packages for the European Union’s financial services regulation. The European Commission has been asked to take account of the conclusions and report back to the Council on progress with simplification initiatives
  • political agreement has been reached on the European Commission’s legislative proposals relating to the retail investment strategy.  The provisional agreement now needs to be formally approved by both the European Parliament and the Council before the new rules enter into force
• a focus on crypto regulation is expected to continue in the US and we expect to see the agencies prepare for implementation of the GENIUS Act, as well as potential changes if the CLARITY Act is passed by the Senate
• we hope to see mainland UAE, Qatar and Oman release implementing regulations for the GCC fund passporting regime in early 2026
• the draft bill containing new exemptions for foreign financial services should continue its passage through the Australian parliament