KEY TAKEAWAYS
- Establish a compliance framework to innovate confidently and avoid regulatory missteps.
- Use testing licenses and sandbox environments to trial new products under regulatory supervision.
- Legal advisors can help clients navigate regulatory constraints and find workable alternatives.
In a sector built on disruption, innovation is a given. But with digital assets, making sure evolution stays within regulatory boundaries is now critical for credibility, scalability and long-term success.
Across markets, a consistent message is emerging: clients want legal advisors who help them innovate without compromising compliance.
Step 1: Clarify the regulatory parameters
A key element of this balance is early regulatory clarity. Clients are increasingly focused on understanding the "regulatory perimeter" at the outset: defining what activities are permissible, what licences are required and where legal grey areas lie.
By establishing the compliance framework from day one, clients can innovate confidently and avoid costly regulatory missteps later. If you know the playing field upfront, you can design around the boundaries rather than run into them.
Step 2: Use sandboxes if advantageous
Many jurisdictions have responded with purpose-built frameworks designed to support innovation while providing regulatory oversight. Graduated licensing regimes such as testing licences, sandbox environments and phased approval pathways - allow businesses to trial new products under regulatory supervision before committing to a full licence. This "safe harbour" model provides an environment where clients can iterate and refine their offerings while gaining credibility from regulator engagement.
Investment hub jurisdictions in particular have played a critical role in this space. Bermuda's sandbox and Class M licensing model lets clients test new concepts under regulator supervision. However, sometimes the most efficient option is to start with a full approval from day one and add permissions and business lines as needed.
Step 3: Work with legal innovators
Beyond regulatory frameworks, advisors are expected to take a strategic, solutions-focused approach. Rather than defaulting to "no" when regulations appear to constrain, legal teams are helping clients unlock workable alternatives—whether that's identifying underused structures, combining jurisdictions or building bespoke solutions that thread the needle between innovation and compliance. Examples include the use of Cayman foundation companies for protocol launches or the use of Guernsey purpose trust as wrappers for DAOs and grant programs, where in both cases Walkers was first in market to do so, as well as leveraging tokenisation vehicles in Jersey, Bermuda, BVI or the Cayman Islands.
In quick-paced sectors like digital assets, this advisory role also extends into risk management and operational strategy. Clients want to know what is practical during waiting periods for licences, or what proactive compliance steps they can take to build goodwill with regulators. These days, advisors are often guiding clients through transition periods, advising on interim structures and identifying the earliest safe point to go to market.
Step 4: Go for cross-border expertise
Crucially, clients value cross-border expertise. Digital asset businesses rarely operate domestically only; their structures and operations depend on a deep understanding of global regulatory trends. Advisors must anticipate divergence across jurisdictions and build resilient structures that can weather scrutiny across multiple markets.
The common thread is clear: compliance can be a cornerstone of smart innovation. Clients want more than just legal sign-off: they want legal partners who can chart a compliant path to progress, so they can launch with confidence in today's high-stakes regulatory landscape.
The post-boom era of digital assets is redefining how institutions operate, invest and scale. Explore the full white paper, 'Digital assets in the post-boom world: Building infrastructure, not hype', for detailed commentary on compliance, tokenisation, DeFi and more.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
