2024 Predictions for Digital Assets

2024 is predicted to be a pivotal year for prominent Crypto and Digital Assets firms with mainstream product offerings. With the backdrop of evolving developments and dynamics in the cryptocurrency and digital space, recent rulings and applications by corporate companies as well as global economic factors at play will start to see an increase in product and adoption.

While there are multiple trends that are likely to emerge in 2024, we have summarised the key ones that are likely to impact UK companies and growth.

• AI and Data automation. Artificial intelligence is already making an impact on financial services companies globally. Use of AI in back-office operations is already increasing efficiencies and reducing operational costs. Risk management and fraud detection are areas where AI will assist in strengthening risk management and cyber credentials. Credit scoring and underwriting is likely to incorporate a broader data set for informed decision-making criteria and expanding access to credit and the increase in personalised service offerings. This is driven in part by the greater data-sets now available with which to train AI, and we are likely to see a focus on ensuring quality of data-sets in order to facilitate better training of AI. Overall, the expansion of AI and data automation will be commonplace in most companies in 2024.

• Increased institutional involvement. As financial services firms benefit from the operational efficiencies in-house gained from implementing DLT into their back-office processes, the further build out of these will present more opportunities to integrate and distribute products. Combined with AI powered algorithms, digital ready products will be a natural use case to enable more efficient personalised trading and accelerated product developments incorporating efficient technologies for traditional markets.  We expect to see more products being made available by traditional asset managers to customers using efficient technologies.

• Broader market adoption in DeFi. Decentralized finance, or DeFi, has gained significant attention, offering products without having to use traditional intermediaries targeting a retail user base. An interesting development here will be as regards the introduction of regulations restricting the marketing to retail users, which may pose obstacles to growth of that market, and the interplay with the position of professional investors, for whom DeFi may open up new sources of investment opportunity. A pivot by informed DeFi businesses might be an opportunity for partnerships with both traditional and tech players, as they look to enhance offerings and gain market share respectively and grow.  We will start to see “hybrid” offerings as well as new entrants arrive in traditional markets as the market evolves.

• Regulatory developments. As regulators step up their protections for retail investors targeted by crypto products from offshore jurisdictions, the step change towards ETFs, as well as other professional access products, will continue to accelerate. Consequently, as companies look to satisfy new regulatory requirements, we will see an increasing trend towards onshore readiness generally.  With digital developments, those that are prepared will likely be quicker to establish market share in established and growing markets.

The cryptocurrency and digital asset markets are dynamic, and conditions change rapidly. Keep informed by signing up to the gunnercooke cryptopulse newsletter or contact the team.

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gunnercooke is one of the largest FinTech, crypto and blockchain full-service practices onshore, and the first major UK law firm to officially accept payments in cryptoassets. The award-winning team represents participants across the ecosystem, from start-ups to regulators, and is regularly published in leading legal publications.

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