"Despite a decline in European funding, mid-market fintech M&A is rising, driven by mature fintech companies pursuing acquisitions amid uncertain IPO markets.

The EU is at the forefront of cryptoasset regulation through MiCA – which will continue to phase in over 2025, and is enhancing operational resilience under DORA, coming into force in January 2025. The EU's proactive regulatory approach to cryptoassets targets stablecoins, restricting certain business models and supporting the Digital Euro project aimed at strategic autonomy and widespread access to CBDC. It is looking to support innovation with the EU DLT Pilot Regime and a programme of exploratory work on new technologies for wholesale central bank money settlement.

The AI Act which is being phased in over the next couple of years, together with sector-specific regulatory guidance, requires financial firms to become AI-literate as well as adaptable to open finance as directed by FIDA reforms. The security of EU wide open finance will be supported by the European Union Digital Identity initiative. This aims to provide secure cross-border digital identity solutions, with 83 million digital ID wallets projected by 2025.

The Instant Payments Regulation mandates eurozone banks to engage in cost-free instant credit transfers with a phased implementation in 2025 and full compliance by 2027. Additionally, efforts are underway to mitigate payment card fraud, urging shared liability among tech firms."

Marius Raetz, Germany Head of Fintech

"The UK continues to dominate Europe’s fintech ecosystem in terms of funding, with a number of maturing fintechs focusing on global expansion. Like many other sovereigns, supranational and agencies, the UK is experimenting in digital issuances, while the industry led Regulated Liabilities Network project is working on a ‘platform for innovation’ across multiple forms of digital money.

On digital assets, the UK is seeking to capitalise on the second-mover advantage with its regulatory package and Digital Securities Sandbox, and address some of the learnings from MiCA. The FCA's roadmap covers stablecoins, crypto custody, and financial crime, with consultations taking place in 2025 and regulations expected to go live in 2026.

As part of the UK’s national payments vision unlocking open banking enabled A2A payments for e-commerce is a strategic short to medium term priority. The UK is planning to introduce a legal framework for digital verification services, without creating a mandatory digital ID system, to improve P2P payments. It has already introduced a fraud reimbursement requirement and pressure may grow to slow down some payments.

In 2025 regulators will use new powers the UK’s critical third party regime to start designating some those “critical” to the financial system and imposing operational resilience rules on them directly. Meanwhile proposals for the regulation of frontier AI are also expected."

Richard Hay, UK Head of Fintech

"Trump's campaign promises – including making the US the “crypto capital of the world” – have fueled crypto market enthusiasm and increased deal-making and interest from investors, builders and contributors. Irrespective of whether Trump delivers on these pledges, the market already has felt the impact, and Bitcoin has reached all-time price highs. And with Republican majorities in both Congressional houses, many expect long-awaited crypto market structure and stablecoin legislation in the second half of 2025, with more immediate priorities being taxes, tariffs, immigration and national security.

Changes in key regulatory leadership, including the SEC and Treasury, and a projected end to “regulation by enforcement,” will lead to greater legal certainty for crypto and tokenization projects. Trump has appointed the White House’s first-ever “AI and Crypto Czar,” signaling an elevation in strategic priority of both the AI and crypto sectors and reflecting the increasing convergence of AI and digital assets.

A more welcoming US regulatory stance towards crypto, together with a focus on US competitiveness, will open opportunities for novel digital asset related products and services and market players, from digital natives to traditional financial institutions and household names, are likely to enter the crypto space in force.

While Trump has vowed not to permit a US CBDC during his term, and FedNow adoption continues to be slow, we anticipate continued advancement and experimentation in the area of digital financial market infrastructure (DFMI). In addition, the CFPB is laying the foundation for open banking in the US, and digital identity verification standards are developing. "

Joshua Ashley Klayman, US Head of Fintech