Two-fifths of global FinTechs struggle with regulatory shifts, research reveals

By Puja Sharma

The fragmented approach to regulation and compliance across the globe is having a significant impact on businesses, according to BVI Finance’s Destination Digital report.

The findings come as a pro-crypto and blockchain administration in the United States has passed the Genius Act – the first major US national crypto legislation, while the United Kingdom also recently published draft legislation for crypto assets and the industry continues adapting to the Markets in Crypto-Assets Regulation which came into force last year in Europe.

A recent survey of 451 global FinTech executives reveals that regulatory complexity is emerging as one of the most significant hurdles for the industry. Nearly 40% of respondents identified regulatory changes and compliance as a major geopolitical force affecting their operations. For more than a quarter of FinTech leaders, keeping pace with constantly evolving and fragmented regulations, especially across multiple jurisdictions, poses a serious challenge, leading to inefficiencies and increased costs.

When selecting jurisdictions for incorporation, clarity in licensing frameworks emerged as a top priority, with 32% of respondents citing it as critical for navigating regulatory uncertainty, particularly for virtual asset businesses. Moreover, privacy and asset protection laws are also seen as essential, with 29% valuing strong legal safeguards. A business-friendly legal environment remains key for 24% of FinTech firms, who believe streamlined regulation enables innovation and reduces operational burdens.

Together, these insights underline a pressing industry need: regulatory clarity and consistency across borders to ensure long-term growth and innovation in global FinTech.

Elise Donovan, CEO, BVI Finance, said: “FinTech companies are a different generation of business – operating cross-border is a non-negotiable. However, this means their models are susceptible to regulatory shifts and disparity between markets.

“Regulatory certainty is vital for FinTech and crypto business growth. Predictable licensing, clear rule enforcement and cross-border recognition all enable informed long-term planning and allow these businesses to instead focus on delivering new products and services to customers as quickly as possible.

“With the focus on finding a jurisdiction to incorporate that offers certainty and stability, the BVI stands out due to its favourable regulatory environment and flexible company and partnership laws, facilitating efficient business operations and exits.”