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Regulatory change, pressure on cost management and growth, and increased investment in technology and data are dominating the financial services industry.
The landscape of digital assets is entering a pivotal phase. Paul Staples and Russell Simpson consider the latest regulatory developments in the UK and beyond.
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The regulatory landscape for digital assets is becoming increasingly clear. As we enter 2025, the clarity long sought by the industry is emerging. Proactive steps from governments and regulators worldwide are shaping frameworks that will affect the future of the industry. This insight summarises recent key developments, the expected expansion of the regulatory perimeter, and the outlook for the industry.
Momentum builds for regulation
The speed of momentum for digital assets regulation is growing. We expect these developments to pave the way for a more inclusive, efficient, and innovative digital economy aligned to the UK’s ambitions of being a hub for this global industry.
The Treasury's proposals will remain and the new Government intends to implement them in full. It aims to engage firms on draft legal provisions for the new regime, including stablecoins as early as possible in 2025.
Stablecoins
The new Government rejected the Treasury's previous proposed phased approach. For simplicity, it intends to implement the new regulated activities for stablecoin at the same time as the rest of the digital assets regulatory regime. The Government will also not bring stablecoins into the scope of UK payments regulations as it considers that doing so would be disproportionate based on current use cases.
Staking services
The Government confirmed that staking services won't constitute a collective investment scheme (CIS). Subsequently, on 9 January 2025, it amended legislation accordingly.
Moving forward, secondary legislation will empower the Financial Conduct Authority (FCA) to establish clear and enforceable rules for firms operating in the sector. This addresses longstanding gaps in the regulatory framework and offers much-needed clarity for businesses seeking to navigate compliance in the fast-evolving digital assets landscape. By strengthening its legislative foundations, the UK aims to position itself as a leader in the global digital assets market.
A growing regulatory perimeter
The above announcements were quickly followed by various publications from the FCA, including its ‘Crypto Roadmap’. Key elements of the FCA’s roadmap are shaping the regulatory timeline.
Previous milestones include the implementation of financial promotions rules in Q4 2023. Financial promotions are now subject to stricter controls under the FCA’s guidelines, ensuring advertisements are fair, clear, and not misleading. These measures aim to protect consumers and prevent reckless investments. Enhanced anti-money laundering measures, like those in the Fifth Anti-Money Laundering Directive (5AMLD), also aim to prevent the misuse of digital assets for illicit activities, bolstering the financial system’s resilience.
Most recently, the admissions and disclosures regime (A&D) proposed in the FCA’s Discussion Paper 24/4 introduces robust due diligence and admission procedures for cryptoassets traded on UK-regulated platforms. From the third quarter of 2025, issuers will need to provide detailed admission documents, meet transparency requirements, and disclose key risks and governance mechanisms. Similarly, the Market Abuse Regime for Cryptoassets (MARC), as outlined in DP24/4, will prohibit insider dealing, market manipulation, and unlawful disclosure of inside information. This aims to improve market integrity and align UK standards with international benchmarks. Provisions are expected to take effect progressively from 2025 onwards.
Looking ahead, stablecoin regulations will address backing assets, redemption, custody, and record keeping by the first half of 2025; while a new prudential sourcebook will focus on capital, liquidity, and risk management to enhance financial resilience by the third quarter of 2025.
In summary, the regulatory perimeter for digital assets is widening as authorities seek to address critical risks and aim to create a stable market and a more defined regulatory environment.
Global perspectives
Globally, progress is evident across key regions, although the risk of regulatory divergence remains.
The EU’s Markets in Crypto-Assets Regulation (MiCAR) provides a framework balancing innovation with consumer protection. MiCAR’s implementation began in mid-2024, offering legal clarity while fostering growth, with it now having become effective since 30 December 2024.
In the United States, agencies like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) continue to influence international standards with their enforcement strategies. However, the new administration under President Trump seems to mark a step change in US policy and is expected to pursue a lighter touch regulatory agenda for digital assets. The resignation of both SEC Chair Gary Gensler and CFTC Chair Rostin Behnam – who was an advocate for tighter regulation for digital assets – signals a shift in US regulatory priorities and an apparent relaxation in the previous enforcement-led approach to the industry.
Elsewhere, the UAE has implemented forward-thinking guidelines, encouraging sustainable growth and managing systemic risks, reinforcing its position as an industry leader.
Authorities are also increasingly focused on environmental concerns. Energy-intensive mining activities are under scrutiny, and both the UK and EU are exploring incentives for greener practices, reflecting the push for environmentally responsible operations.
The path ahead
As 2025 begins, clarity in regulatory frameworks for the sector is becoming a reality. With second mover advantage, the UK is incorporating insights from the EU’s MiCAR framework and the UAE’s progressive regulations to harmonise standards, reducing the risk of regulatory arbitrage.
This year marks the beginning of a transformative time for digital assets. With the mist clearing, a long-anticipated regulatory framework is becoming evident. Regulatory clarity will enable businesses to operate confidently and provide consumers with the transparency and security needed to engage with this fast-moving market.
The new UK requirements aren't expected to come into force until 2026. However, firms operating in this sector should familiarise themselves with these developments, engage with future consultations, and begin to plan compliance with the new requirements.
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