The digital asset sector puts on a suit

For an industry that’s been synonymous with volatility, the start of the year has proven to be relatively dull for the digital assets industry. 

There may have been some sparks of excitement at Davos when Coinbase chief Brian Armstrong clashed with Bank of France Governor François Villeroy (link) over trust in the financial system, but the sector’s CEO and top cheerleaders otherwise took an attentive, suit-wrapped approach at the World Economic Forum. 

BlackRock’s Larry Fink, as de facto lead moderator and Trump whisperer, played an important part in proceedings, advocating for the tokenisation of financial assets as the world of wealth-management goes on-chain. 

The other talking point in Switzerland, where our team of SEC Newgate experts was dispatched for a week, was the future role of stablecoins in the financial systems. 

These tokens mimic fiat currencies, including the US dollar, the Euro and Pound Sterling, but the big debate is whether they should be able to generate yield – the crypto term for interest – for their holders. 

Banking lobbyists in Washington are opposing such a move, while Armstrong and others in the crypto industry are pushing back. 

The dispute has peeved Trump, who wants his Clarity Act to pass before the US mid-terms and the White House has subsequently summoned both sides of the debate to thrash out their differences. 

That could be easier said than done since stablecoins are seen as an existential risk to the banking industry, with one estimate claiming that the industry could lose a cool $1tn if holders of stablecoins would be able to be rewarded just for holding the tokens (link). 

In the UK, meanwhile, the digital assets industry is still sifting through the latest flurry of consultations and updates from the Financial Conduct Authority and the government. 

The financial watchdog unveiled new plans in late December, outlining what a full crypto-asset framework would look like, with the consultation closing in February this year. 

If it also goes ahead, the regime will take effect in the second half of 2027, long after the implementation of the EU’s MiCA Act, the US’ Genius Act and the UAE’s own digital asset legislation. 

Despite the lag, which has seen some of the industry in the UK vote with their feet and take their business elsewhere, there’s still a severe lack of awareness about the industry amongst lawmakers. 

Organisations like the Crypto APPG and trade association CryptoUK, a client of SEC Newgate’s, are doing their utmost to counter this educational shortfall. 

These MPs and peers would do well to pop over to the City next week, where the great and the good of the sector will be decamping for the Digital Assets Forum. The event, one of crypto’s major get-togethers, shows that the UK still has considerable heft when it comes to crypto, even if patience is wearing thin on a regulatory regime.