COVER STORY • AON PARTNERSHIP
3 Softening supervisory stance Sullivan also argues that the recent reassessment of the Basel Committee's proposed prudential rules for banks' crypto exposures indicates the regulatory attitude towards banks' engagement with digital assets is softening, bolstering institutional NARRATIVE IN THE UK Both Aon and BCB Group are optimistic about the regulatory environment in the UK, although they urge the country to accelerate its rollout to catch up with the EU and US. "The narrative should shift from one of consumer protection versus growth to one of enabling innovation through stringent, clear regulation,” says Sullivan. interest in this sector. CHANGING THE
CROSS-BORDER PAYMENTS ARE A CORE INTEREST The inability to provide cross-border payments quickly, affordably and at scale was a major operational burden. After BCB's instant settlement network was introduced in 2020, institutions that handled large numbers of high-volume transactions were no longer reliant on legacy infrastructure that was built purely for fiat and didn't cater to the 24/7 demands of the modern economy. Those efficiencies have changed not just how money moves, but how risk is assessed. THE DUE DILIGENCE SHIFT The industry is having more "mature risk conversations", Poland adds, as insurers focus on and quantify risk. For example, consider what happens when there are one or two rogue actors − what is the overall impact to a business and its clients? There has been a notable shift in the granularity of conversations. What were once generic cyber discussions have now become much deeper conversations about precise loss scenarios, lateral movements and detection speed. Poland says this isn't about using an "off-the-shelf" policy; it's about quantifying specific risks. For example, how quickly can a business detect
governance are embedded into operations and regularly reviewed as transaction volumes change and the market evolves. Sullivan points to three key factors that have had the biggest material impact on the institutional perception of digital assets: 1 Stablecoin regulation New bespoke regulatory frameworks − including the EU's MiCA rollout, the GENIUS Act in the US and the UK's proposed sterling-denominated systemic stablecoins − have been major catalysts for improving both institutional perception of and participation in digital assets. 2 Custody and safeguarding clarity Sullivan says the industry has witnessed a number of high-profile failures in the past. This is why an emphasis on robust client asset safeguarding is now paramount, and BCB Group welcomes moves by regulators such as the FCA to align new rules for payment institutions with its rigorous Client Assets Sourcebook framework to significantly raise the bar for client protection. For Sullivan, this shift is about more than compliance: robust safeguarding is now the minimum expectation for building institutional trust and is no longer a competitive differentiator.
Act, which is still being finalised, and similar proposals, rather than copying them wholesale. The Clarity Act will not take effect until January at the earliest, which means the UK won't be that far behind, unless there are unforeseen delays.
These developments represent a rapid transition towards regulatory certainty, which institutions are demanding in order to fully engage with this sector. MOVING FROM SILOES TO EMBEDDED
RISK MANAGEMENT Both firms expect large traditional financial institutions to move from a siloed, experimental approach to one that fully integrates digital asset risk and compliance into core, group-level governance structures. Sullivan says this
The FCA should be able to fix a number of known holes in both MiCA and the GENIUS Act.
transition is forcing institutions to apply long-established
WHAT DOES A GOOD UK REGIME LOOK LIKE?
Poland says if the UK can design a regime that provides clarity and high standards, avoids some of the unintended consequences seen elsewhere, and is genuinely competitive on a global level, it can position itself as a leader. "We already have a lot going for us: talent, legal infrastructure, and a sophisticated insurance and capital markets ecosystem,” he notes. He believes that with the right regulation, the UK could become a “real powerhouse”, bolstered by the wisdom of seeing what other regulators have tried, where they've stumbled and how to correct the mistakes while taking the successes. "The FCA should be able to fix a number of known holes in both MiCA and the GENIUS Act," he adds. In regulation, being second can be an advantage, but only if you move fast enough. These questions are set to dominate industry discussions in London in 2026, as institutions, regulators and insurers assess how quickly the UK can turn regulatory ambitions into a successful new regime. These are the kinds of questions BCB Group's and Aon's BLINC Live! event is designed to tackle in February.
governance principles to digital assets, rather than creating new frameworks from scratch. However, he says this adjustment can only be achieved with four key actions: 1. Demanding proof of foundational safeguarding and risk management 2. Enforcing strict segregation of client assets 3. Establishing tier-one counterparty relationships 4. Adopting 'best-of-both' regulatory compliance For digital asset providers, insurance is also becoming a commercial passport rather than a one-off purchase, as financial institutions, particularly those with tier-one status, demand it to satisfy their due diligence requirements. “Insurance is increasingly being used as a governance tool that exposes weak controls long before a crisis does,” Poland says − although “it is a tool in a set of many”, he adds. DEBUNKING MYTHS AROUND INSURANCE CAPITAL There is a longstanding misconception that the digital
But the UK will “miss a trick” without clear rules - which the
FCA have announced will be in place by the end of 2027, says Poland. He believes there is certainly a window to put the UK on the map, but it won't stay open indefinitely. The FCA has just released a swathe of consultation papers on crypto − and Poland believes this is a big opportunity. "The FCA has been engaging actively with industry, and if they get this right, it’s a real chance for the UK to build on MiCA and to learn from the US Clarity
and contain the breach of an endpoint or collusion between one or more insiders?
"We’ve spoken to digital asset firms who were initially slightly dismissive of the risks they face, and then a year or two later they experience a major incident that hits the press,” he says. This is one of the reasons why so many financial institutions were hesitant to engage with digital asset providers until recently. Now, however, the best-run digital asset firms take a structured approach to identifying and quantifying their risks – and proactively decide which risks to prioritise for mitigation and/or transfer. BCB Group treats risk as a core operating discipline, not a reactive compliance exercise. This means resilience, safeguarding and
asset sector doesn't have enough insurance capital. Poland disagrees, arguing that it’s insurers’ understanding of the broader digital asset market, and their risk appetite, rather than raw capital, that’s currently constraining supply. "Some jurisdictions have already allowed insurers to use digital assets as capital", he added. This is often because the regulators of those jurisdictions have more time and capacity to engage directly with individual firms and move more nimbly to address risks. Using digital assets as insurance reserves can reduce asset liability mismatches when a liability and
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