Nicola Kendall is Saffery Trust Client Director.
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While cryptocurrency and other digital assets have rapidly moved from the fringes of finance to mainstream investment and wealth planning, one challenge continues to set the pace for institutional adoption: tax and regulatory uncertainty.
For many professionals across traditional and decentralised finance, the question is no longer whether digital assets will be part of the future financial system, but how that system will be governed, taxed and regulated in a way that supports innovation while the associated risks are suitably mitigated.
Rise of regulation
As interest and investment in the asset class continues to grow, so too does speculation regarding regulation, compliance, and tax treatment. Digital asset regulation is evolving across the globe at a rapid pace, but not uniformly. Several major jurisdictions have introduced clearer frameworks, while others remain fragmented.
The OECD’s Crypto-Asset Reporting Framework (“CARF”) represents a significant step in global standardisation. CARF will require jurisdictions to collect and exchange information on crypto-asset transactions in a manner similar to the Automatic Exchange of Information rules that transformed traditional tax reporting.
In the European Union, the forthcoming implementation of the Markets in Crypto-Assets Regulation (MiCA) is setting a new benchmark. MiCA looks set to represent one of the world’s most comprehensive frameworks for digital assets, covering everything from stablecoin issuance to the licensing of exchanges, custodians and other crypto-asset service providers. Its focus on transparency, consumer protection and consistent supervisory oversight is expected to enhance institutional confidence and accelerate the mainstream integration of digital assets across European financial markets.
The United Kingdom is moving in a similar direction, though through a series of incremental regulatory refinements. For example, in a major move in October , the UK Financial Conduct Authority (FCA) lifted its ban on crypto asset sales to retail and wealth investors – a decision described by industry leaders as a “good first step” towards making the UK a more open and competitive environment for digital assets.
The United States, meanwhile, remains defined by its regulatory fragmentation. Federal agencies, including the SEC, CFTC and IRS, continue to take differing views on digital asset classification and regulatory treatment, while state-level licensing legislation adds further complexity.
The appeal of international finance centres
International Finance Centres (IFCs) are advancing robust legislation for digital assets, positioning themselves as secure and competitive hubs for innovation, investment, and long-term wealth structuring for compliant digital asset structures.
Jurisdictions such as Guernsey are actively strengthening their credentials: the Guernsey Financial Services Commission has launched a Digital Finance Initiative (DFI) to align its financial services legislation with digital innovation, creating a Digital Forum for consultation, updating its counter-financial-crime guidance, and encouraging early engagement with digital finance propositions.
The Cayman Islands is also making space for digital assets within existing frameworks. For example, under its Virtual Asset Service Providers Law (VASP), service providers engaged in activities such as trading, custody, issuance, or the transfer of virtual assets are required to register with the Cayman Islands Monetary Authority (CIMA). This framework integrates digital assets into the jurisdiction’s established financial services environment, providing regulatory oversight while supporting innovation and investor confidence.
Placing assets into wealth structures in jurisdictions such as Guernsey or the Cayman Islands provides digital asset owners and investors with certainty over how their assets will be classified and treated for both tax and regulatory purposes.
When combined with the ongoing expansion of the Common Reporting Standard (“CRS”) to cover digital assets, cross-border institutions will need robust reporting, verification and governance infrastructure.
Looking ahead
Professionals across banking, fintech and crypto-native sectors increasingly recognise that institutional-grade certainty on tax treatment is essential for operational efficiency, risk management and long-term scalability.
Once an asset class that appealed to investors drawn by pseudo-anonymity, decentralisation, and independence from traditional financial institutions (TradFi), the pitfalls of inconsistent global regulation, heightened reputational risks, and significant penalties for missteps, has prompted many investors to turn to TradFi service providers, such as trustees, for support regarding tax and regulatory compliance for their digital assets, as well as for seamless succession planning and asset protection.
The direction of travel for digital assets is clear: more regulation, not less. At the same time, any regulatory framework will need to remain proportionate and sensitive to the sector’s roots in decentralisation, ensuring it doesn’t stifle innovation or slow the pace of technological progress.
Far from being a threat, many professionals welcome balanced regulation, bringing clarity and legitimacy. And those who successfully navigate this evolving landscape will be the ones who unlock the greatest opportunities as the market matures.
