Regulatory Landscape for Crypto-Based Loyalty Programs in 2025: Global Perspectives and Compliance Strategies

Graham Robinson
May 28
5 min read

The integration of cryptocurrencies into loyalty programs has emerged as a transformative trend in consumer engagement, offering businesses novel ways to incentivize customer behavior. However, the regulatory environment governing these initiatives has become increasingly complex, particularly as governments worldwide grapple with balancing innovation against financial stability and consumer protection. By 2025, crypto-based loyalty programs must navigate a patchwork of regional frameworks, from the European Union’s Markets in Crypto-Assets Regulation (MiCAR) to evolving state-level rules in the United States and Asia’s hybrid approaches. This report examines the current regulatory landscape, identifies compliance challenges, and provides strategic recommendations for businesses leveraging blockchain technology in loyalty ecosystems.

The European Union: MiCAR and the Standardization of Crypto-Asset Services

MiCAR’s Scope and Implications for Loyalty Programs

The Markets in Crypto-Assets Regulation (MiCAR), fully implemented in December 2024, establishes the EU’s first unified framework for crypto-assets, replacing fragmented national laws1 2. Under MiCAR, crypto-assets are categorized into three groups:

Asset-Referenced Tokens (ARTs): Pegged to multiple assets or currencies.
Electronic Money Tokens (EMTs): Linked to a single fiat currency.
Utility Tokens: Designed for specific platform-based services.

Crypto loyalty points typically fall under utility tokens if they lack monetary convertibility. However, MiCAR mandates that issuers of ARTs and EMTs obtain banking or e-money licenses, creating a regulatory advantage for traditional financial institutions entering the loyalty space1 12. For example, a bank issuing euro-backed loyalty points could leverage existing licenses, while fintech startups face higher compliance costs.

Compliance Challenges in the EU

Licensing Requirements: Programs offering convertible points (e.g., redeemable for cash or third-party goods) risk classification as EMTs, triggering stringent capital and auditing rules1 12.
Sustainability Reporting: The European Commission’s proposal to include crypto mining in the EU Taxonomy Regulation forces businesses to reconcile loyalty program energy consumption with ESG goals1.
Cross-Border Complexity: While MiCAR harmonizes rules across the EU, businesses operating loyalty programs in multiple member states must still navigate local consumer protection laws, such as Germany’s strict refund policies for unused points2 19.

A 2024 case study involving Lufthansa’s blockchain-based Miles & More program illustrates these challenges. The airline had to restructure its tokenomics to avoid EMT classification after EU regulators flagged the program’s partnership with a cryptocurrency exchange that allowed miles-to-Bitcoin conversions12.

United States: Deregulation and State-Level Fragmentation

Federal Policy Shifts Under the Trump Administration

The 2025 U.S. regulatory landscape reflects a pro-innovation stance, with the SEC dropping high-profile cases against Coinbase and Gemini, while the CFTC gains expanded jurisdiction over crypto commodities3 12. However, this deregulatory environment introduces ambiguities for loyalty programs:

Stablecoin Legislation: The proposed GENIUS Act establishes federal oversight for bank-issued stablecoins, enabling seamless integration with payment systems1. Retailers like Walmart have already piloted USD-backed loyalty tokens for supplier settlements, though consumer-facing applications remain limited by state money transmission laws3 12.
Tax Treatment: The IRS’s 2025 guidance classifies non-convertible loyalty points as non-taxable rewards, but convertible tokens are treated as property, creating accounting complexities for programs with multi-tier redemption options3 6.

State-Level Divergence

While federal agencies scale back enforcement, states have enacted conflicting rules:

Texas: Passed the Digital Asset Loyalty Program Exemption Act (2024), excluding non-convertible tokens from securities regulations.
New York: Maintains its BitLicense requirement for any program allowing points-to-crypto exchanges, citing consumer protection concerns3 8.
California: The Digital Financial Assets Law (DFAL) mandates liquidity reserves for loyalty token issuers, mirroring MiCAR’s requirements for EMTs6 12.

This patchwork forces national brands like Starbucks to maintain separate program structures across states. Their 2024 “Stars Blockchain” initiative uses geo-fenced smart contracts to disable conversion features in restrictive jurisdictions8 12.

Asia-Pacific: Bridging Innovation and Consumer Protection

Japan’s Progressive Framework

Japan’s Payment Services Act (PSA) exempts limited-purpose loyalty points from financial regulations if they:

Cannot be transferred between users.
Expire within six months of issuance.
Are redeemable only with the issuer or designated partners6 15.

Mitsubishi UFJ’s 2024 “MUFG Coin” loyalty program leverages this exemption, offering non-transferrable points for purchases at affiliated retailers. However, the program’s integration with the Rakuten ecosystem prompted scrutiny from Japan’s Financial Services Agency (FSA), which warned against “de facto convertibility” through bundled services6 19.

Hong Kong’s Strategic Licensing Regime

Hong Kong’s Virtual Asset Trading Platform (VATP) regulations exclude loyalty points from licensing requirements if they are:

Non-denominated in any currency.
Issued solely to promote goods/services.
Non-convertible to fiat or other virtual assets10 11.

The October 2024 partnership between Circle and HKT exemplifies compliant innovation. Their blockchain loyalty platform uses USDC for backend settlements while issuing non-convertible “HKT Points” to consumers, avoiding VATP classification9 10.

Singapore’s Risk-Based Approach

The Monetary Authority of Singapore (MAS) distinguishes between payment tokens and limited-purpose loyalty points, with the latter exempt from licensing under the Payment Services Act7 15. However, programs exceeding S$10 million in outstanding liabilities must file monthly liquidity reports, a rule that impacted Grab’s 2025 GrabRewards expansion into NFT-based rewards15 20.

Latin America: High Adoption Amid Regulatory Gaps

Brazil’s CBDC-Driven Ecosystem

Brazil’s Central Bank has integrated its Drex digital currency with private loyalty programs, allowing consumers to earn and burn points via smart contracts. Participating retailers receive tax incentives for adopting CBDC-compatible systems, driving a 214% increase in crypto loyalty enrollments since 20234 12.

Argentina’s Inflation Hedge Phenomenon

With annual inflation exceeding 150%, Argentine consumers increasingly prefer loyalty points pegged to stablecoins like USDC. The 2024 “PesoToken” case saw regulators approve USD-backed programs while banning peso-denominated points, citing currency instability risks4 5.

Compliance Strategies for Sustainable Implementation

Regulatory Mapping and Scenario Planning

Businesses must conduct jurisdiction-specific analyses addressing:

Token Classification: Engage legal counsel to determine if loyalty points qualify as securities, commodities, or utility tokens under local laws8 12.
Redemption Scenarios: Model worst-case regulatory actions, such as forced conversion suspensions or reserve requirements6 15.
Geofencing: Implement IP-based restrictions to disable non-compliant features in high-risk regions3 8.

Technology Stack Considerations

On-Chain Transparency: Use public blockchains like Ethereum for audit trails, but layer zero-knowledge proofs to protect customer data8 18.
Modular Design: Adopt interoperable smart contract templates that can be updated for new regulations without platform forks12 18.

Partnership Models

Bank Collaborations: Leverage traditional financial institutions’ existing licenses for fiat conversions, as seen in Bank of America’s 2025 partnership with Delta SkyMiles1 12.
RegTech Integration: Deploy AI-powered compliance tools like Chainalysis KYT to monitor real-time transaction risks8 18.

Conclusion: Navigating the Next Regulatory Frontier

The 2025 regulatory landscape presents both barriers and opportunities for crypto loyalty programs. EU businesses must prioritize MiCAR alignment, while U.S. operators navigate state-level fragmentation. Asia’s exemptive frameworks encourage experimentation, provided programs maintain non-convertibility. Looking ahead, four trends will shape the space:

CBDC Convergence: National digital currencies will increasingly interface with private loyalty tokens, as seen in Brazil’s Drex integration4 12.
Sustainability Mandates: Carbon footprint disclosures for blockchain loyalty programs may become standardized by 20261 19.
Interoperability Standards: Cross-chain protocols like Polkadot’s XCM could enable regulatory-compliant point transfers between ecosystems18 19.
AI-Driven Compliance: Machine learning models will automate real-time adjustments to program terms based on regulatory changes8 18.

For businesses, success hinges on building agile programs that balance innovation with proactive compliance—a challenge requiring continuous monitoring of this dynamic legal landscape.

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