As digital assets become integrated into traditional wealth planning, tax and regulatory clarity become critical to institutional adoption. Nicola Kendall examines how global frameworks, international financial centers and evolving compliance standards are shaping the future of cryptocurrency regulation.
Nicholas Kendall is Chief Customer Officer of Saffery Trust.
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As cryptocurrencies and other digital assets have rapidly moved from the fringes of finance to traditional investments and wealth planning, one challenge continues to set the tone for institutional adoption: tax and regulatory uncertainty.
For many traditional and decentralized finance professionals, the question is no longer whether digital assets will be part of the future financial system, but rather how that system will be governed, taxed, and regulated in a way that supports innovation while appropriately mitigating associated risks.
Rise of regulation
As interest and investment in this asset class continues to grow, so does speculation regarding regulation, compliance and tax treatment. Regulation of digital assets is evolving at a rapid pace around the world, but not uniformly. Several large jurisdictions have put in place clearer frameworks, while others remain fragmented.
The OECD Crypto Asset Reporting Framework (“CARF”) represents an important step in global standardization. CARF will require jurisdictions to collect and exchange information on crypto-asset transactions in a manner similar to the automatic information exchange rules that have transformed traditional tax reporting.
In the European Union, the upcoming implementation of the Markets in Crypto-Asset Regulation (MiCA) sets a new benchmark. MiCA is expected to represent one of the world’s most comprehensive frameworks for digital assets, covering everything from stablecoin issuance to licensing for exchanges, custodians and other crypto-asset service providers. A focus on transparency, consumer protection and consistent prudential supervision is expected to strengthen institutional trust and accelerate the widespread integration of digital assets in European financial markets.
The UK is moving in a similar direction, albeit making a series of incremental regulatory improvements. For example, in a major move in October, the UK’s Financial Conduct Authority (FCA) lifted its ban on selling crypto assets to retail and wealth investors – a move described by industry executives as a “major decision”.good first step» to make 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 have divergent views on digital asset classification and regulatory treatment, while state-level licensing laws further add to the complexity.
The attractiveness of international financial centers
International Financial Centers (IFCs) are advancing robust legislation for digital assets, positioning themselves as secure and competitive centers 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, by creating a digital consultation forum, updating its guidance on tackling financial crime and encouraging early engagement on digital finance proposals.
The Cayman Islands is also making room for digital assets within existing frameworks. For example, under his Virtual Asset Service Providers Act (VASP), service providers engaged in activities such as trading, custody, issuance or 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 in 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 tax and regulatory purposes.
Combined with the continued expansion of the Common Reporting Standard (“CRS”) to cover digital assets, cross-border institutions will need a robust reporting, verification and governance infrastructure.
Looking to the future
Professionals in the banking, fintech and crypto-native sectors increasingly recognize that institutional certainty in tax treatment is essential for operational efficiency, risk management and long-term scalability.
Once an asset class that appealed to investors drawn to pseudo-anonymity, decentralization, and independence from traditional financial institutions (TradFi), the pitfalls of inconsistent global regulation, increased reputational risks, and significant penalties for missteps have prompted many investors to turn to TradFi service providers, such as fiduciaries, for help with tax and regulatory compliance of their digital assets, as well as transparent succession planning and asset protection.
The direction 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 decentralization, ensuring that it does not stifle innovation or slow the pace of technological progress.
Far from constituting a threat, many professionals welcome balanced regulation, bringing clarity and legitimacy. And those who successfully navigate this evolving landscape will be the ones to unlock the greatest opportunities as the market matures.
