Incoming UK crypto regulations will drive ‘survival of the fittest’

In the face of pending regulatory change as the UK strives to fold digital assets into mainstream financial frameworks, there will be “a movement towards survival of the fittest” for the country’s cryptocurrency companies, according to Stephen Cartwright, director at European law firm Fieldfisher.

Cartwright was speaking during a panel discussion entitled ‘The CFO perspective: Managing risk in digital asset markets’ at Blinc Live on 25 February 2026.

The panel session aimed to help chief financial officers (CFOs) to better understand the operational, accounting and regulatory risks associated with both cryptocurrencies and stablecoins – a newer form of digital tokens designed to maintain a stable value relative to a fiat currency.

Cartwright’s warning was delivered as the UK prepares to implement a new regime for crypto asset firms, requiring these businesses to demonstrate robust governance, segregation of assets and compliance capability.

HM Treasury confirmed its plans to introduce ”firm and proportionate rules” for cryptoasset firms in December 2025 via the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2025.

The new rules are expected to be effective from October 2027 and replace what Cartwright described as the UK’s existing “patchwork” of oversight for the crypto industry.

Primarily, the regulatory changes mean that cryptoasset businesses will be regulated by financial services regulator the FCA, with chancellor of the exchequer Rachel Reeves noting last December: ”Bringing crypto into the regulatory perimeter is a crucial step in securing the UK’s position as a world leading financial centre in the digital age. 

”By giving firms clear rules of the road, we are providing the certainty they need to invest, innovate and create high skilled jobs here in the UK, while giving millions strong consumer protections and locking dodgy actors out of the UK market.”

The FCA stated that firms in scope of the new regime can begin submitting licensing applications in September 2026.

Cartwright told Blinc Live delegates that the cryptoasset market had already shifted significantly from the pre-Covid-19 “wild west” back in 2020, when serving court orders on Binance – a digital asset online trading platform – had proved challenging for his firm.

He continued: “What we’re moving towards is a structured regulation framework and that can be seen as anti-business and not good for UK public limited [companies].

“But the way it’s coming in through cryptoassets regulation is to instil what’s already there under the Financial Services and Markets Act 2000 and ensure that cryptoassets are embedded in that framework.

“That will have potential adverse effects for small and medium players and that’s not to be shied away from.

”At the moment, there’s uncertainty about how [these firms] will operate or whether they want to operate in the UK when that’s one market and the European Union (EU) is much broader.”

Need to evolve

Addressing the operational challenges facing cryptoasset CFOs under the amended regulation, Cartwright said that it will be a “test” for firms to meet this heightened scrutiny, rather than simply a “tick box exercise”.

He added: “It’s going into the mechanics and working to ensure that you can show that your assets are identifiable and segregated and you can ensure that this is not just a superficial licensing scheme.”

Audris Siow, head of institutional partnerships at European crypto exchange Bitvavo, stressed that internal risk processes must evolve within cryptoasset businesses.

She explained that a “core tension” for these organisations is that digital asset markets operate 24/7 in real-time, but traditional risk management tools and frameworks in finance are often batch-based and not designed for continuous, instant settlement.

To tackle this “initial divide” in operational models, she stressed that a “convergence” of traditional financial governance and crypto native infrastructure would help “paint the picture in a more systematic way” that would be relevant for crypto sector.

By combining established controls – including audit trails, transaction monitoring and trade surveillance – with systems built for real-time digital markets, Siow explained that firms can create a better integrated risk framework.

She said: “Through regulation, we mirror the business that we want to operate under, so the external risk is managed or reflected through the standards and the regulations that shape how you want to move forward.

“All this management of external risk becomes part of financial structure rather than something on the side because it becomes part of your workflow in the ecosystem.”

For Cartwright, the “big challenge” for CFOs navigating the incoming regulatory changes will be the “personal liability and scrutiny”.

He continued: “I don’t want to scare people, but it’s moving to a position of being responsible for things that are probably outside of your remits or knowledge base.

“Businesses that are headquartered elsewhere [in the world], if they have certain elements that connect to [the] UK and tick the right boxes, they’ll be under scrutiny and it’s important that teams and individuals know that they’re placed within that.”

Chief operating officer and partner at Ht.digital and CryptoUK board advisor Ian Taylor added that firms without sufficient compliance staff or regulatory law expertise may struggle to keep pace with “gateway” requirements.

He said: “On the flip side of that is the industry and the regulator understanding that we all have to move at a pace that achieves the goal of allowing these firms to go through the gateway and be regulated – otherwise they’re going to go elsewhere.”

Opportunity or burden?

While the event’s panellists acknowledged the compliance burden of the UK’s incoming regulation, they agreed that it is also an opportunity for the cryptoasset industry – one that has the potential to favour certain firms. 

Cartwright said that for larger, well resourced firms, clearer regulation “effectively creates a moat between [existing competitors] and new startups”.

However, Cartwright questioned whether – on a policy level – the regulations are completely beneficial or in line with previous governmental ambitions.

He concluded: “It does give a framework that we’ve been crying out for – something coherent rather than a patchwork of financial promotions and quality regulation through a registration scheme.

“The challenge will be whether businesses can practically comply or, more importantly, do they want to comply?”