The opinions expressed here are those of the authors. They do not necessarily reflect the views or positions of UK Finance or its members.

Europe is entering a transitional moment in its crypto journey. For many mainstream financial institutions, digital assets are increasingly becoming a part of their core operational plans. Regulatory initiatives like MiCA are paving the way to greater adoption, but the process is not easy and comes with its share of compliance burdens. 

As we enter 2026, companies with a crypto focus have an important matter to solve. Namely, how can they build up capabilities while keeping pace with the growing list of AML expectations and without overwhelming their compliance teams?

The answer, to my mind, lies in making AI an integral part of the AML toolkit.

Regulation is bringing crypto into the mainstream

2025 has been a year marked by a lot of practical work. MiCA’s requirements and authorisation deadlines have pushed banks, payment firms and fintechs to define their crypto strategies and upgrade internal processes. Supervisors at national levels are also reinforcing this momentum. 

Meanwhile, in the UK, the FCA issued two consultation papers in 2025: CP25/25 and CP25/14. While these don’t count as properly finalised rules, these papers do signal a major shift in how the regulator intends to supervise crypto firms in the future. 

The first (CP25/25) consultation proposes applying the existing FCA Handbook rules to these companies, aligning their governance and AML standards with those expected of traditional financial services firms. 

The latter (CP25/14) focuses on stablecoin issuance and custody of crypto assets. It proposes requirements on the backing of assets and segregation of client holdings, as well as overall governance standards. Broadly speaking, the end goal here is to help crypto firms develop operational integrity and resilience while also strongly emphasising consumer protection.

When looked at together, all these steps together signal an important milestone towards crypto’s increasing adoption, but they also bring new responsibilities: crypto firms must now prove they can monitor transactions with the same level of quality that clients are used to in TradFi markets.

UK AML requirements: what firms should expect

While Europe’s MiCA represents arguably the most comprehensive crypto regime to date, the UK’s model is also evolving at a rapid pace. Previously, crypto regulation in this region focused largely on financial promotions controls and AML supervision, but CP25/25 and CP25/14 indicate a change in that approach. 

The country now pursues a broader reach in its regulatory framework, seeking to better align crypto firms with traditional regulated entities. If implemented effectively, this viewpoint could position the UK as a genuinely strong crypto regime on the global stage.

But, of course, there is still a big challenge ahead that needs to be overcome before we can get to that future. No matter what region we talk about, most of the existing AML frameworks were not really designed to fit with blockchain technology. This creates considerable limitations in how they can be applied to crypto-based activities and markets.

AI offers a practical path to stronger and scalable AML

Throughout 2025, supervisors across various countries have noted that traditional AML models are showing their limits, struggling to keep pace with risks posed by crypto activity and leaving gaps that illicit actors can exploit.

This is where AI can step in to help change the game in a number of useful ways, such as:
 

• Better risk detection: checking thousands of data points at once, spotting behavioural anomalies across wallets, chains and asset types that would otherwise be invisible in traditional monitoring.
• Lower false-positive rates: AI is able to cut down on alert queues and help compliance teams focus on genuinely suspicious transactions, saving time and costs.
• Scalable compliance: AI capabilities give firms a way to scale their monitoring capacity without forcing them to up their staffing costs along with it.

If Europe is to lead in crypto adoption, firms here must have the right tools to balance out the risks. New standards require new solutions, and so AI stops being an optional enhancement and becomes instead the new frontline of robust AML in crypto markets.