Why Crypto’s Regulatory Gap Is Now an Institutional Problem

Both the EU and the US now have stablecoin frameworks. MiCA is in full enforcement. The GENIUS Act is in its rulemaking phase, with Treasury targeting final rules by July 2026. After years of regulatory uncertainty, the industry got what it asked for: clarity.

Here’s the problem. The clarity doesn’t match.

A stablecoin that is compliant under the GENIUS Act may not satisfy MiCA’s e-money token requirements. A custody arrangement that meets MiCA’s segregation standards sits in a different universe from what the SEC is still defining through a patchwork of guidance and state-level regulation. For any institution operating across the Atlantic, this isn’t a technicality. It’s a recurring operational cost that shows no sign of resolving.
They agree on the principles. They disagree on everything else.

On paper, the convergence is real. Both frameworks require 1:1 reserve backing with high-quality liquid assets. Both prohibit yield on payment stablecoins. Both mandate AML/KYC compliance, audit obligations, and redemption at par. A year ago, none of this existed. That matters.

But convergence in principles is not interoperability in practice. MiCA classifies stablecoins into e-money tokens and asset-referenced tokens, each with different licensing requirements. The GENIUS Act creates a separate category entirely: permitted payment stablecoin issuers, overseen by the OCC, FDIC, and state banking regulators. The licensing paths don’t map onto each other. The supervisory structures don’t communicate. There is no mutual recognition mechanism.

The result: a global institution using stablecoins for cross-border settlement is running two parallel compliance tracks for the same asset class. Two custodial frameworks. Two reserve audit regimes. Two interpretations of what “segregated” means operationally. Every new product triggers the same exercise.

Where you incorporate your issuing entity, under which regulatory framework, and in what sequence has become the most consequential structural decision for any firm scaling stablecoin operations in 2026.
This is new. A year ago, the choice was between regulated and unregulated. Now the choice is between multiple legitimate regulatory regimes that don’t interoperate. And the decision locks in operational architecture, banking relationships, reserve custody arrangements, and supervisory obligations that are expensive to change later.

One development worth watching: the GENIUS Act includes a provision empowering the US Treasury to pursue regulatory passporting with comparable jurisdictions. If implemented, this could allow issuers from jurisdictions with “substantially similar” regimes to access US markets without establishing separate US entities. That’s a meaningful signal. But it requires bilateral negotiation, and we are years from seeing it in practice.

The neutral jurisdiction advantage

Jurisdictions that sit outside both the EU single market and the US regulatory perimeter, but maintain robust and recognised financial oversight, are becoming strategically important for exactly this reason.

Switzerland is the clearest example. Digital assets have been regulated as a substantive asset class there since 2018. The framework is principles-based rather than prescriptive: flexible enough to accommodate new instruments without requiring new legislation, rigorous enough that institutional compliance teams accept it. Because Switzerland is not bound by MiCA’s authorisation requirements, yet maintains well-established bilateral agreements with major financial centres, it functions as a regulatory bridge. Swiss-regulated infrastructure can interface with both MiCA-compliant counterparties in Europe and US entities navigating the GENIUS Act, without being structurally locked into either framework.

This isn’t arbitrage. It’s architecture. And as more institutional capital flows across jurisdictional boundaries in digital assets, the operational advantage of neutral, recognised jurisdictions will compound.

Build for the friction, not around it

MiCA and the GENIUS Act represent genuine progress. They replace open legal questions with defined rules, even where those rules conflict. Institutions can now deploy capital against a known risk profile rather than an unknown one.

But the gap between the two frameworks is structural, not transitional. MiCA 2 is already being discussed. The GENIUS Act’s implementing rules are still being written. Both frameworks will evolve, but they will evolve on their own timelines, responding to their own political pressures, toward their own definitions of “compliant.”

The firms that treat jurisdictional friction as a permanent design constraint, and build their infrastructure accordingly, will be able to launch products, serve clients, and move capital across borders while their competitors are still reconciling which version of “correct” applies.

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SCRYPT is the operating system for digital assets. Swiss-regulated. Globally operational. scrypt.swiss