Stablecoins, Private Credit and Offshore Competition Shape Next Phase of Digital Assets Contributors – Citywealth Crypto Editorial Board
Stablecoins, private credit and tokenised financial infrastructure are emerging as the dominant themes across digital asset markets as institutional capital continues to move on-chain and jurisdictions compete to attract businesses facing an increasingly complex regulatory environment.
Citywealth Crypto Editorial Board
Charles Kerrigan, Partner, Finance, Crypto, Digital Assets, CMS
Paul Pirie, CEO, Founder, TCI Finance (Turks & Caicos Islands)
Ben Lee, Partner in the Crypto Tax & Accounting, Andersen LLP
Ash Costello, Partner, FinTech, Funds, Aria Grace Law
Sean Kiernan, CEO, Founder, Greengage
Lee Birkett, Founder, CEO, MoneyBrain
While Bitcoin remains the sector’s flagship asset, industry attention is increasingly focused on the financial plumbing underpinning digital markets. From regulated lending products and tokenised deposits to offshore digital asset frameworks and AI-powered financial systems, the industry appears to be entering a new phase driven by infrastructure rather than retail adoption alone.
Stablecoins and private credit attract institutional capital
Among market participants, there was broad agreement that stablecoins have become the most important source of liquidity within digital asset markets.
Sean Kiernan of Greengage said discussions at Bitcoin Prague reflected growing institutional interest in stablecoins and digital private credit, particularly as investors search for yield-generating on-chain opportunities.
Market liquidity, he noted, is increasingly concentrated in stablecoins, money market funds and private credit structures, while many tokenised real-world asset projects continue to struggle with secondary market liquidity.
The shift reflects a wider trend across global markets as investors focus on assets capable of generating income and supporting real-world financial activity rather than purely transactional use cases.
Banks prepare a challenge with tokenised deposits
The rise of stablecoins is also prompting a response from traditional financial institutions.
Paul Pirie outlined industry efforts to develop bank-led tokenised deposit infrastructure capable of facilitating real-time settlement between participating institutions. The initiative, involving major banking groups, could become operational next year if interoperability challenges can be overcome.
The development highlights a growing contest between crypto-native payment rails and bank-issued digital money.
While stablecoins currently dominate blockchain-based settlement activity, tokenised deposits are increasingly viewed as a mechanism for banks to retain deposit flows while offering many of the same efficiencies promised by distributed ledger technology.
Questions surrounding accounting treatment, interoperability and cross-border deployment remain unresolved, but momentum behind tokenised deposit initiatives continues to build.
UK firms face a regulatory cliff edge
The most contentious discussion centred on the UK’s forthcoming regulatory framework and the potential consequences for crypto-native businesses.
Participants argued that the transition from anti-money laundering registration to full Financial Services and Markets Act authorisation by October 2027 will fundamentally reshape the competitive landscape.
Lee Birkett, founder of MoneyBrain, said the governance, controls and infrastructure required to obtain Part 4A permissions could cost firms between £10 million and £20 million, creating barriers that many existing operators may struggle to overcome.
Several contributors estimated that as many as three quarters of currently registered firms could exit the market within twelve months of the regime becoming fully operational.
The discussion reflected broader concerns that the FCA remains significantly more supportive of tokenised traditional financial products than crypto-native businesses, creating a regulatory environment that favours incumbent financial institutions and large asset managers.
Charles Kerrigan of CMS noted that tokenised versions of conventional financial products are likely to receive a more accommodating regulatory response than decentralised or crypto-native structures.
For many firms, the challenge is no longer simply regulatory compliance but economic viability.
Cayman and Guernsey move to seize the opportunity
As compliance costs rise in major financial centres, offshore jurisdictions are moving quickly to attract digital asset businesses.
Birkett confirmed that parts of MoneyBrain’s front-end and onboarding operations have been relocated to the Cayman Islands following the introduction of new CAF reporting obligations and CRS account validation requirements earlier this year.
The operational changes reflect a broader reassessment by digital asset firms of where best to establish infrastructure and conduct business.
At the same time, Guernsey, the Cayman Islands and the Isle of Man are developing specialist frameworks covering foundations, decentralised autonomous organisations and digital asset structures.
Birkett revealed plans for Moneybrain to participate in the creation of a Guernsey governance structure comprising a company, trust and foundation, operating under a DAO framework and supported by Cayman BiPSDEX self custody wallet and voting infrastructure.
Ben Lee of Anderson LLP said competition between jurisdictions is accelerating as governments recognise the economic potential of digital assets and seek to position themselves as centres for innovation.
The race to attract businesses is becoming increasingly important as regulatory divergence grows between major markets.
Bitcoin lending moves into regulated markets
One of the more notable product developments discussed was the launch of a regulated Bitcoin-backed lending structure designed for mainstream investors.
Birkett outlined a peer-to-peer lending model that converts sterling into Bitcoin, secures the resulting assets and delivers a dynamic yield linked to Bitcoin performance within an ISA wrapper.
The structure reflects a broader trend towards bringing crypto lending and yield-generating activities within regulated financial frameworks.
Participants suggested that lending products, custody services and digital asset income strategies are increasingly likely to migrate towards regulated channels as institutional participation expands.
AI and blockchain begin to converge
Artificial intelligence emerged as another major theme, particularly as investors and regulators seek to understand the implications of autonomous systems operating within financial markets.
Kerrigan said investor due diligence around AI-native businesses has intensified significantly, with growing scrutiny of intellectual property, governance structures and commercial defensibility.
Rather than accepting AI claims at face value, investors are increasingly focused on whether businesses possess genuinely proprietary technology and sustainable economic models.
Ash Costello of Aria Grace Law highlighted the growing influence of the European Union’s AI Act and the wider debate around liability for autonomous systems.
Questions surrounding responsibility, legal personality and accountability remain unresolved, particularly as AI agents begin interacting directly with financial systems.
Participants also noted that blockchain developers are already testing self-custody payment mechanisms for AI agents, creating new possibilities for autonomous transactions while introducing additional regulatory complexity.
The next phase of digital assets
Taken together, the discussion pointed to an industry becoming increasingly institutionalised while simultaneously fragmenting across jurisdictions.
Stablecoins and private credit continue to attract capital. Banks are building competing tokenised infrastructure. Offshore financial centres are positioning themselves as innovation hubs. Meanwhile, regulators are raising the cost of participation for crypto-native firms.
The result is a market increasingly defined not by price movements alone, but by the competition to build the infrastructure, regulatory frameworks and financial products that will underpin the next generation of digital finance.
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