Freshfields Fintech: Our Predictions for 2025

As we did in 2021, 2022, 2023 and 2024, we have crowdsourced predictions for the year ahead from the Freshfields global fintech team. Here, we identify common themes in 2025 across different jurisdictions, with a little help from GenAI!

Digital assets

The regulation of digital assets is a major theme globally, with significant developments expected on both sides of the Atlantic. Cryptoasset valuations surged following Donald Trump’s victory in the US presidential elections, with Bitcoin exceeding US$100,000. With great price fluctuations comes greater scrutiny, however, and we are expecting significant cryptoasset developments in 2025 on both sides of the Atlantic.

The UK is set to develop a comprehensive cryptoasset framework in 2025, with a series of consultation and discussion papers anticipated under the “crypto roadmap”. Similarly, the EU's Markets in Crypto-Assets Regulation (MiCA), which started to apply in full on 30 December 2024, aims to provide a harmonised regime. However, with different transition periods across Member States and limitations on passporting during these transition periods (see our recent blog post), many crypto businesses have been struggling to navigate MiCA’s licensing regime and we expect to see clarification in 2025. For a detailed overview of MiCA, check out our MiCA Navigator. In the US, the new administration’s support for digital assets suggests a potentially more favourable regulatory environment, with key agency appointments expected to influence the direction significantly. Finally, Hong Kong says it wants to become a major digital asset trading centre, but time will tell whether it fulfils that ambition. The Securities and Futures Commission’s cautious and conservative approach to licensing has so far resulted in a small handful of digital assets services providers being authorised.

AI in financial services

AI remains a hot topic in fintech, with significant focus on its application and regulation. While generative AI technologies evolve rapidly, we do not expect regulatory change to move at quite the same pace. 

The EU's AI Act is a comprehensive framework that does not specifically target financial services, but attention is shifting in that direction with the Commission carrying out a targeted consultation in 2024 on the application and impact of AI in financial services. Other jurisdictions, such as Hong Kong and the UK, have been less keen to implement a holistic framework, and the financial services regulators have instead issued guidance to financial institutions (albeit limited), which we expect to continue to see. 

There are a number of areas where AI may create new issues for regulators across the globe to consider, which means that AI is likely to stay at the top of the agenda. For example, the Bank of England has raised concerns (which have been echoed by Gary Gensler at the SEC) that a “monoculture” could emerge in a world where AI is increasingly relied upon, potentially harming market stability. Enforcement under existing market abuse regimes may also be challenging if generative AI technologies influence one another to move markets in opaque ways or through use of agentic AI. A number of additional financial stability risks were highlighted by the Financial Stability Board in its November 2024 report to the G20 on the financial stability implications of AI.  

Data in financial services

2025 will be a pivotal year for expanding the Open Banking and Open Finance regulatory frameworks to enable greater use (and monetisation?) of financial data. 

The UK’s Data (Use and Access) Bill (DUAB) aims to introduce a statutory framework for Smart Data schemes (summarised in our blog post). Similarly, the EU is working towards a comprehensive Open Finance framework for Financial Data Access (FIDA) to facilitate the mobilisation of customer financial data among regulated institutions (see our post). In the US, the recently finalised Open Banking rule by the CFPB mandates free transfer of personal financial data, despite ongoing legal challenges. This rule is likely to persist due to bipartisan support.

Consumer protection in fintech

The trend towards increased consumer protection – which led to a number of new regulatory frameworks being implemented in 2024 – is expected to result in increased enforcement under those new frameworks in 2025. In the UK, we think the implementation of the Digital Markets, Competition and Consumers Act 2024 will mean many businesses, including fintechs, re-assess their compliance programmes and whether they need to adapt their current practices to ensure compliance with consumer protection rules (see further here). The now fully-implemented Consumer Duty is also expected to drive further enforcement, particularly concerning payments firms (given the FCA’s recent focus on their non-compliance)  and vulnerable customers.

We also anticipate new “buy now pay later” (BNPL) regulation to be implemented in various jurisdictions. For instance, the UK government has explained that it intends to lay a new BNPL statutory instrument before parliament in early 2025. The EU’s revised Consumer Credit Directive (CCD II), which Member States must implement by 20 November 2025, will also expand the scope of consumer credit to include BNPL products, enhancing transparency and protection (for more information, check out our podcast). 

Changing payments landscape

The ongoing transformation of the payments landscape is a global theme. 

The UK’s Chancellor of the Exchequer, Rachel Reeves, used her November 2024 Mansion House speech to highlight payments as an area of focus for the current government. The UK’s National Payments Vision, covered in our November 2024 blog post, outlines plans for a trusted payments ecosystem. We have already seen the FCA’s September 2024 consultation paper on proposed changes to the safeguarding regime for payments and e-money firms (explored in more detail here), and we expect to see the new interim-state safeguarding rules during the first half of 2025. 2024 also saw the introduction of the mandatory reimbursement rules in the UK for victims of authorised push payment (APP) fraud (see here). However, there are a number of cases before the Courts by victims of APP fraud who would fall outside the scheme (e.g., cross-border payments), where individuals are seeking to rely on equitable remedies, as well as arguing for the imposition of a “retrieval duty” (see here). Judgments may well be handed down by the Courts in 2025 and may result in sharing any liability of receiving banks and payment service providers.

In the EU, the revised payment services legislative package aims to adapt to digital transformation and address consumer protection, fraud prevention, and Open Banking. We expect the final package to be published in 2025 after a five-year journey. For blog posts summarising the proposal and the European Parliament’s position, see here and here. 

In addition to those regulatory changes, we are expecting further movement regarding the potential issuance of central bank digital currencies (CBDCs) in various regions. The ECB's digital euro initiative will continue, with a decision on the next phase expected in October. Similarly, the Bank of England’s work on a digital pound will continue in 2025 with a decision on whether to issue a CBDC expected “around the middle of the decade” (see our blog post). In Hong Kong, trade finance, CBDC bridges and the adoption of stablecoin regulatory regimes to support stablecoin issuers are aimed at improving the speed and lowering the costs of cross-border transfers.

Financial crime enforcement

The focus on reducing financial crime continues across jurisdictions. 

The UK’s FCA remains vigilant on money laundering and investment fraud. One area to watch will be the impact of the failure to prevent fraud offence imposing strict liability on firms where a large organisation fails to prevent criminal fraud, which comes into force on 1 September 2025.

In the EU, AML and sanctions compliance are priorities, with new guidelines for financial institutions on sanctions-specific policies. The European Banking Authority has recently issued guidelines setting out which sanctions-specific policies, procedures and controls financial institutions are expected to have in place starting from year-end 2025, with PSPs and cryptoasset service providers facing additional to-dos, including in relation to screening and freezing transfers of funds and cryptoassets (see here for further information). 

While we generally expect financial services agencies to take a lighter touch on enforcement actions under the new Trump administration in the US, there may well be continuity in the areas of AML and sanctions. Indeed, during President Trump’s first term, agency scrutiny and enforcement exposure related to AML and sanctions violations continued, and the same may prove true in his second term in office.