As companies seek to unlock greater value, transforming digital assets through innovation and improved efficiency will play an increasingly critical role. Large financial services players and institutions are already exploring the technology to develop next-generation digital assets, products and services. As the market matures, companies and financial players of all sizes now need to ensure they understand the impact of this evolving technology and how they can harness and use it effectively.
A digital asset is any item that exists in a digital format, is uniquely identifiable, carries value or rights for its owner and can be created, stored and transferred electronically. Such assets include cryptocurrencies, including bitcoin and stablecoins, as well as tokenised real-world assets (RWAs), all distributed using blockchain technology. In particular, stablecoin is gaining traction as a reliable digital settlement currency. A significant reason for its popularity is that it can be pegged to a FIAT currency, which provides price stability against a given FIAT currency unlike other crypto-assets for users while remaining on a public blockchain environment.
More recently, global payment specialist Visa has integrated stablecoins into its own payment infrastructure. Other significant financial services players, such as BlackRock and J.P. Morgan, are also positioning digital assets at the strategic core of their businesses. As institutional adoption grows, it will be important to determine what the current issues are and the best approach companies must take when entering the digital asset market.
Understand the regulatory pain points
A clear regulatory framework is key to financial innovation as it offers a standardised approach that supports market integrity and trust. So far, Europe, the U.S., Hong Kong and Singapore have been developing regulatory frameworks for digital assets, including cryptocurrencies. Indeed, Europe’s Markets in Crypto-Assets Regulation (MiCA) establishes a regulatory framework for stablecoins and crypto asset service providers. The rules, which came into force in 2024, promote transparency, disclosure and anti-money laundering laws. In particular, MiCA sets strict thresholds by which crypto asset issuers and service providers can operate.
In terms of becoming a key player in digital assets, the challenge for Europe remains adoption. For example, 99 percent of the market capitalisation of stablecoins is currently in U.S. dollars, representing a total market capitalisation over $300bn. One item under discussion is to offer mechanisms for stablecoins by providing clients with an interest yield. From a regulatory perspective, it’s essential to maintain consistency across jurisdictions to avoid regulatory arbitrage that could destabilise the market. As the regulatory landscape evolves, it’s increasingly important to maintain strong compliance oversight to prevent digital asset markets from being disrupted.
Have a clear strategy and don’t underestimate the time to market
Having a clear strategy on how you want your business to participate in the digital assets market is key to optimising value and supporting growth. You may wish to make international payments quickly and more cost-effectively than traditional settlement systems by using digital assets, especially stablecoins and deposit tokens. Banks may want to issue stablecoins, act as a custodian, or serve as a service provider for stablecoins issuers. Having a clear strategy will help ensure your business has the technological infrastructure, the much-needed skills and the support in place to develop plans as they evolve.
CASPs within the EU must have a MiCA licence. However, as with any relatively new regulation, the application process is not straightforward, which can lead to unwanted delays. In a rapidly evolving market, a six-month delay or longer can be a severe competitive disadvantage. A focus on trusted regulatory support, on-the-ground local expertise and benchmarking against peers will be key. This will ensure there is the depth and breadth of technical knowledge required to help complete the application process in the fewest iterations but also develop a digital asset strategy fit for purpose in the least amount of time.
Assess risk-to-reward levels of market developments
A lack of knowledge and trust in digital assets has previously led to slow engagement, with risk-to-reward ratios deemed too high. However, significant players entering the market providing a wide range of services. Among players bringing serious credibility to the market are Société Générale, with its subsidiary SG Forge, J.P. Morgan and BlackRock. In addition, the integration of stablecoins into Visas payment infrastructure enables it to bridge emerging blockchain payment models with its vast merchant network, helping to develop familiarity with digital assets.
As more institutions issue stablecoins and develop tokenisation that transforms RWAs into blockchain and other digital asset solutions for clients within a regulatory environment, the growth opportunities are increasing. For example, BlackRock has already launched several crypto exchange traded funds . Plus, there are ongoing discussions at the European level to adopt a central bank digital currency. The move would complement physical cash and is expected to make payments across the euro area more resilient, efficient and transparent, while also giving more control to the European Central Bank . In addition, a digital Euro would reduce reliance on non-European payment providers both from a wholesale and retail perspective. The ability of banks to issue digital currencies, including stablecoins, will enable 24/7 cross-border payments with greater transparency, faster processing and significantly lower costs than traditional settlement systems. For asset managers in particular, digital asset technology will help move the sector into an era of tokenised funds that simplifies fund buying, selling and ownership into a seamless, transparent operation.
While implementing a digital asset strategy requires planning and support, its ability to optimise value will allow businesses to focus on growth opportunities. How companies capture and develop such opportunities will determine their resilience in a new digital asset business landscape.
