Publication
Fintech & Payments Legal Outlook 2025
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Publication
The second half of the year has seen the tide start to turn with the insatiable appetite for AI in finance has bringing a renewed sense of hope. Following Trump's re-election in the US, global markets and tech stocks are experiencing a boost and going into 2025, the mood is more positive.
Meanwhile, ongoing efforts to digitalise financial assets, payment systems, and market infrastructure are progressing from pilot to scale, with tokenisation holding transformative potential. Retail customer demand for instant, frictionless payments drives innovation, and all market participants are feeling the pain of cost pressures for which the innovation holds the promise of solutions.
The compliance landscape is increasingly complex for fintech and payments, including crypto and digital assets. Regulators are expanding oversight, but are recognising the need to promote innovation in a competitive world where nationalism is on the rise. Different regulatory approaches and a lack of common standard add to the challenge, with divergences between the EU and UK, competition between Singapore and Hong Kong, and in the US, continuing and often contentious regulatory questions - with hopes that could change in 2025.
We focus on opportunities and risks in finance innovation, including tokenisation, new forms of digital money, instant payments and open banking. These innovations unfold amid growing demand for AI, security, and resilience in financial services - and the increasing convergence of AI and digital assets. For those innovating to solve the key efficiency challenges in finance, taking a holistic approach to the compliance challenge has become an imperative.
In 2025, the global fintech sector is expected to see a rebound in investment and M&A activity with deal volumes expected to rise if geopolitical uncertainties ease and interest rates stabilize. There is optimism for VC growth and late-stage funding rounds, especially in emerging economies where fintech continues to address significant market needs. We hone in on the bright spots.
"While there is a lot of investor dry powder needing to be deployed, investors are looking for business models with positive unit economics and the ability to scale in a commercially rational manner."
Niranjan Arasaratnam, Partner, Singapore
Momentum continues to build behind tokenisation initiatives and other efforts to digitise the financial markets. More milestones are expected to be met in 2025, building on the progress of previous years. But there remains a long road ahead. The implications of the forces currently in play will likely take several years to unfold.
"It may sound like the same story year-on-year, but the market has seen meaningful progress on various fronts over the last year, and we can expect more in 2025."
Richard Hay, UK Head of Fintech
There has been an uptick in stablecoin initiatives over the last year as the sector explores mainstream use cases. Several jurisdictions have introduced or are introducing new stablecoin regulations, but there are notable differences in the scope and effects of these regimes. Meanwhile, some central banks are strongly pushing retail CBDCs while others see no need.
"In the short to medium term, stablecoins and CBDCs may become important components of a diverse retail payments landscape."
Peiying Chua, Asia Head of Fintech
Linklaters' fintech lawyers have been advising on technology-driven solutions in financial services for over 40 years.
Expert fintech legal advice: regulation, digital transformation, payments, investment, data, cyber, compliance, innovation and dispute resolution globally.
Digital payments have become a bedrock of the global economy. Technological advancements and consumer demands are driving faster and more convenient digital payments. But greater speed and less friction can increase risks. Different countries around the world are finding different ways to promote innovation while also protecting consumers.
"For card payments, biometric authentication methods, such as fingerprint scanning and facial recognition, are becoming more widespread. In the longer run, technologies like blockchain and AI could potentially help enhance the security of payments without compromising speed."
Ben Packer, Litigation, Arbitration and investigations Partner, London
Across the world cryptoassets are increasingly being brought inside the regulatory perimeter. But jurisdictions are taking different approaches and moving at different speeds resulting in a complex and fragmented regulatory landscape. Going into 2025 all eyes are on the leading crypto market, to see what the Trump 2.0 administration will influence the US regulatory landscape and, in turn, the market.
"In 2025, crypto, like AI, appears to be a strategic must-win for the US. A clearer, more welcoming US regulatory stance will likely have big impacts on crypto markets across the world."
Joshua Ashley Klayman, US Head of Fintech
Artificial intelligence continues to challenge the way that financial services firms think about their business. The emergent capabilities of generative AI, in particular, raise both excitement and caution as firms test what the latest technology can do and where its limitations lie. For regulated firms, AI-specific rules and guidance are on the horizon but the immediate priority is ensuring their AI adoption meets existing standards, including those designed to manage third-party risks.
"Setting up an AI governance framework which ensures compliance with existing data protection and financial services regimes is an important first step towards meeting the additional challenges of AI-specific regulation."
Julian Cunningham-Day, Global Co-Head of Fintech
Open banking is transforming the financial landscape and gaining worldwide momentum. Even in jurisdictions where open banking has been mainly industry-led, regulators are now providing frameworks which support customers in accessing a wider range of innovative financial products through open finance. Digital identity and biometrics have a key role in providing the security to ensure consumer trust in greater data sharing and collaboration between financial service providers.
"As they innovate to meet customer demands, firms must also continue to meet regulatory standards, such as making sure they protect their customers’ data."
Guillaume Couneson, Partner, Brussels
