Regulation vs innovation: the future of digital assets

The rapid evolution of digital assets presents a compelling dilemma: how to balance innovation with regulation. As the use of blockchain technology surges, institutional investors are increasingly recognising its potential. State Street’s 2024 Digital Assets Study highlights this trend, revealing that one-third of institutional respondents have increased their allocations to digital assets over the past year, with 69% expecting to expand these allocations further in the next five years. However, this growth is occurring amid calls for clearer regulatory frameworks; notably, developments such as the UK’s Digital Securities Sandbox aim to support innovation whilst ensuring market integrity. Furthermore, regulators in many jurisdictions face a delicate balancing act fostering an environment that promotes technological advancement in the digital asset space whilst safeguarding security and stability of the financial markets they oversee.

Essentially, the category of digital assets includes…