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Happy Thursday, advisors!
In this edition, Maria Golenkov discusses how the EU’s MiCA framework serves as a model for upcoming U.S. crypto regulations. She emphasizes the importance of aligning governance and controls now to prevent future complications.
In the “Ask an Expert” section, Felix Xu addresses the crucial role of operational risk as the primary investment risk in digital assets, outlining the internal controls advisors should insist upon.
Happy reading.
MiCA's implementation deadline has arrived. It's time for U.S. advisors to take notice.
At present, the U.S. crypto regulatory environment is scattered across various agencies. The Securities and Exchange Commission (SEC) oversees one aspect, the Commodity Futures Trading Commission (CFTC) another, and FinCEN has its jurisdiction, compounded by state-level regulations. There is no cohesive strategy or unified framework. Conversely, the European Union finalized its regulations in 2023, implemented them throughout 2024, and has been enforcing them since. The Markets in Crypto-Assets Regulation (MiCA) is now the benchmark for all firms in Europe. As of July 1, 2026, the grace period allowing firms to operate under previous national regulations has ended. To serve EU clients now, firms must have full authorization or cease operations.
This situation is significant because Europe typically leads in financial regulation, with the U.S. following suit. This trend is currently unfolding, yet many advisors remain unaware.
So what does MiCA entail? For businesses providing crypto services such as custody, advisory, or exchanges, licensing and regulatory oversight are mandatory. Client assets must be kept separate, undergo independent audits, and be monitored in real-time. Firms must meet capital and transparency standards, communicating risks to clients in clear, understandable terms rather than legal jargon.
The need for these controls is underscored by past incidents. Galois Capital, for example, lost 50% of its assets on FTX, which was not a qualified custodian. In 2023, Binance faced enforcement actions from the SEC and CFTC for inadequate asset segregation and insufficient risk disclosures, despite managing billions. This was not due to incompetence but a result of unclear regulations that led companies to take legal risks.
Historically, U.S. operations have been reactive, with firms like Coinbase and Binance facing lawsuits for unclear compliance paths. However, in September 2025, the SEC and CFTC issued a joint statement clarifying that registered exchanges could facilitate trading in certain spot crypto products. By March 2026, they further detailed which crypto assets qualify as securities and how stablecoins fit into the regulatory framework.
The U.S. is roughly one year behind the EU in this regard, and its guidance is not yet enforceable. The final regulatory framework will likely mirror MiCA.
For advisors, this means that governance frameworks are not just a formality to be handed off to compliance teams. They are essential fiduciary responsibilities. A Fidelity survey revealed that 58% of institutional investors are already investing in digital assets, yet concerns about custody security and regulatory clarity persist. Your clients are entering this market, and it's your responsibility to demonstrate that you have robust controls in place, rather than relying on a generic checklist.
Begin by assessing your current practices. Do you maintain documented governance? Has an independent party verified your controls? Are you actively managing cyber risks or just hoping for the best? Be clear about your offerings; custody differs from advisory services. If you hold assets, segregated accounts and real-time monitoring are crucial. If providing advice, you need documentation on suitability and conflict-of-interest disclosures.
Build your framework gradually. Proper implementation takes time—often a year or more—depending on your current gaps and your team's understanding of duties segregation. Each firm’s framework will be unique, as operations vary widely.
From my experience building these frameworks, teams often underestimate implementation time, frequently doubling or tripling their initial estimates. They might plan for nine months, but it can take eighteen. The challenge is not usually the regulations themselves but retrofitting controls into pre-existing systems.
The firms that succeed are those that started early. Those that delayed until enforcement began found themselves spending the next two years on settlements and regaining trust.
Here’s a question for you: if you initiated a governance framework today, how long would it take to implement effectively? Double or triple that estimate, then work backward to determine when you should start. The regulators have revealed their intentions. Europe has set the model, and the U.S. is developing a similar structure. The only question is whether you will be prepared first or scrambling to catch up.
- Maria Golenkov, partner and head of digital assets, governance, risk & controls, DLA LLC
Ask an Expert
Q. What internal controls framework should advisors demand before allocating to digital assets?
Advisors must recognize that operational risk in digital assets is not a secondary issue; it is integral to investment risk. In traditional markets, investors can rely on a well-established network of custodians, administrators, prime brokers, auditors, and standardized reporting systems. In digital assets, these protections are less consistent, placing greater emphasis on the manager’s internal control environment. Before discussing potential returns, advisors should clarify who controls the assets, who can authorize transactions, and how positions are reconciled independently.
Focus on practical functionality. No individual should be able to initiate, approve, and finalize a transaction independently. Wallet permissions should be restricted based on roles, transaction sizes, counterparties, and approved addresses. Custody, trading, valuation, and reconciliation should be adequately independent of one another. Advisors should also inquire about how exceptions are managed, as that is often where risk arises. What processes are in place if a trader needs to utilize a new protocol, transfer assets outside of standard hours, or respond to market disruptions? A credible framework should ensure these decisions are controlled and traceable without hampering business operations.
Q. What is unique about digital asset management concerning timely and accurate reporting, reducing regulatory scrutiny and potential penalties?
The key distinction is that while transaction records are highly visible, their accounting implications may not be. A blockchain can show an asset moving from one address to another, but it does not clarify whether that movement was due to a trade, collateral transfer, bridge transaction, staking deposit, internal reorganization, fee payment, or something else. This distinction is crucial for valuation, financial reporting, tax treatment, and regulatory review. Although data is accessible, transforming it into a reliable accounting system requires strong frameworks and consistent judgment.
Firms that encounter difficulties are often those with fragmented data and no disciplined classification process. When an audit or regulatory inquiry arises, the team may struggle to reconstruct activities from wallet histories, spreadsheets, and employee knowledge, leading to costly inconsistencies. A better approach is to integrate reporting into the transaction process itself. Each significant transaction should have a clear business rationale, an approver, a valuation source, and a documented accounting treatment at the time of occurrence. Accurate reporting typically results from sound operational design rather than complex year-end reconciliations.
Q. What is the best way for individuals to keep abreast of changes in crypto accounting, governance, and technology?
The solution is not to chase every headline. In such a rapidly evolving market, information without a structured framework can result in confusion rather than clarity. Firms should implement a systematic review process to distinguish between urgent changes and mere developments of interest. Regulatory releases, accounting guidance, custody regulations, tax interpretations, and significant protocol changes should be assigned to specific team members for regular review. External accountants, legal advisors, administrators, and technical experts can provide valuable insights, but someone within the organization must be accountable for translating that guidance into policies, controls, and operational decisions.
Successful organizations also establish a feedback loop among investment, operations, finance, legal, and technology teams. A new protocol feature may seem like an investment opportunity, but it could also alter custody assumptions, valuation methods, liquidity risks, or reporting obligations. These implications must be assessed before deploying capital, not discovered during an audit. Digital asset firms do not need to predict every technological or regulatory shift. They require governance structures that enable consistent evaluation of changes, documentation of decisions, and adaptation without compromising controls over client capital.
- Felix Xu, co-founder, ZX Squared Capital
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By CoinDesk ResearchJun 29, 2026Commissioned byBinanceBinance remains crypto’s leading exchange, expanding from spot and derivatives into RWAs, payments, savings, yield, and broader financial services.
Why it matters:
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