Designing Proportionate Investor Protection in Crypto Asset Regulation – Comparing the EU and UK’s Approaches

On 23 June 2026, the Centre for Banking & Finance Law invited Professor Iris Chiu of the University College London to present a seminar entitled ‘Designing Proportionate Investor Protection in Crypto Asset Regulation – Comparing the EU’s and UK’s Approaches’, based on her forthcoming book, Regulating the Crypto Economy (second edition).

Professor Chiu began by briefly introducing the first edition of her book, arguing that the crypto economy presents new innovative and productive opportunities, and that regulation needs to adopt an enabling business approach while guiding responsible conduct and activities.

Professor Chiu analyzed the five stages of crypto economy development, covering Bitcoin and its native blockchain, smart contracts and Ethereum Virtual Machine, initial coin offerings, tokenization, and token financialization. She further pointed out that the EU’s Markets in Crypto-Assets Regulation (MiCAR) of 2023 marked the ‘completion’ of financial regulatory framing and has become the primary regulatory approach to the crypto economy. However, some questions remain regarding the dominance of financial regulation in this area. By exploring the key principles of MiCAR and the upcoming UK regulation, Professor Chiu argued that an overall path-dependent approach to regulatory frameworks is adopted, which is not as innovative or responsive as it could be. In addition, not all crypto activities are subject to regulatory standards, such as non-fungible tokens, digital art, and meme coins. She summarized several regulatory achievements of MiCAR, including the proportionate derivation of crypto asset offer regulations from securities offer regulations, the derivation but stricter regulations of stablecoins pegged to fiat currencies, and the proportionate derivation of non-bank financial intermediary regulations from crypto asset intermediary regulations.

Professor Chiu elaborated on MiCAR and the UK regulation. Specifically, MiCAR regulates the market for direct offers of crypto assets, establishing new legitimate retail channels to balance pro innovation and investor protection. This retail access is based on the publication of white papers for public offers of crypto assets, which include many compulsory warnings for investors. However, MiCAR currently lacks a grandfathering regime for crypto assets already in existence, and its regulatory scope remains unclear. Under the upcoming UK regulation, the public offer route is similar to the EU in terms of disclosure documents, but based on materiality and subject to exemptions. The UK imposes more responsibilities and obligations on exchanges, as they are likely to be the primary route to access crypto assets. In the UK, crypto assets are currently treated as Restricted Mass Market Investments (RMMI). However, with the new regulation taking effect, questions have arisen about how the RMMI designation applies to public offer/exchange admission, and whether the RMMI legacy is necessary or an overkill. Based on this, Professor Chiu compared the EU and UK regulations on crypto assets, covering aspects such as trust relationships, custody services, trading activities, and conduct of business. She concluded that bringing crypto assets under regulation could address certain investor protection issues, while prompting reflection on how financial regulation should respond to innovation needs.