As cryptocurrency adoption accelerates worldwide, governments are introducing new regulations that could reshape how the industry operates. This week brought a wave of major policy moves — some encouraging innovation, others tightening control.

US Government Shutdown Stalls ETF Progress

In the United States, a government shutdown has paused progress on crypto-focused exchange-traded funds (ETFs). With no budget agreement between Democrats and Republicans, many federal agencies, including the Securities and Exchange Commission (SEC), are running with minimal staff.

As a result, the SEC missed its Oct. 3 deadline to review Canary Capital’s spot Litecoin ETF filing, leaving several pending ETF applications untouched.

Despite the shutdown, Washington saw one development that caught the crypto industry’s attention — the Senate confirmed Jonathan McKernan as Under Secretary for Domestic Finance at the Treasury Department. McKernan has previously criticized alleged “debanking” policies, which some believe have targeted crypto businesses.

UK Lifts Ban on Crypto Exchange-Traded Notes

In a significant policy reversal, the UK’s Financial Conduct Authority (FCA) announced that retail investors can now trade crypto exchange-traded notes (ETNs). The FCA said the market has matured enough for these products to be considered safer and better understood.

Crypto ETNs were banned in 2021, with regulators citing high risks and limited consumer protections. While the ban on crypto derivatives remains, this move marks a clear shift toward a more open investment environment.

Luxembourg’s Wealth Fund Dips Into Bitcoin

Luxembourg’s sovereign wealth fund has officially entered the crypto market, allocating 1% of its portfolio — about $9 million — to Bitcoin ETFs.

Treasury Director Bob Kieffer said the investment aligns with the fund’s long-term diversification goals and demonstrates confidence in Bitcoin’s potential. The fund’s rules allow up to 15% of assets to be placed in alternative investments like private equity, real estate, and digital assets.

Kenya Approves Crypto Regulation Bill

Kenya’s parliament passed the Virtual Assets Service Provider Bill, setting the stage for the country’s first regulatory framework for exchanges, brokers, wallet providers, and token issuers.

The bill now awaits President William Ruto’s signature. Local crypto experts say the move strikes a balance between innovation and consumer protection.

Chebet Kipingor, operations manager at Busha Kenya, called the legislation “a signal that Africa’s most innovative economy is ready to embrace progress over fear.”

EU Pushes for Centralized Crypto Oversight

The European Securities and Markets Authority (ESMA) plans to take over regulation of crypto exchanges from national agencies. ESMA Chair Verena Ross said the goal is to reduce market fragmentation and make European capital markets “more integrated and globally competitive.”

Some EU nations — including France, Austria, and Italy — have expressed concerns about inconsistent enforcement of the bloc’s Markets in Crypto-Assets (MiCA) regulation, urging tighter coordination.

Bank of England Reconsiders Stablecoin Limits

The UK’s central bank, the Bank of England (BoE), could be softening its stance on stablecoin caps, according to reports that surfaced Tuesday.

The BoE is reportedly reconsidering its caps for corporate stablecoin holdings. This could include exemptions for companies that need to maintain larger stablecoin reserves. Concerns over systemic risk moved the BoE to set current caps at 20,000 pounds for individuals and 10 million pounds for companies.

Crypto exchanges and other firms operating with digital assets have argued that this puts an unnecessary constraint on their business. Exchanges are particularly affected given their need to support trading and maintain liquidity.

GC Cooke, a co-founder of UK-based stablecoin management platform Brava Finance, said that BoE governor Andrew Bailey is warming to the idea of stablecoins existing alongside central bank-controlled assets like central bank digital currencies.