Digital assets and cryptocurrencies

Digital assets encompass a diverse array of items, from blockchain-based assets to non-blockchain digital files and intellectual property, each with unique characteristics and applications, reflecting the broad and evolving nature of digital ownership. In simple terms digital assets are electronic files or records that hold value or rights. Digital assets stored on blockchain technology include cryptocurrencies, non-fungible tokens (NFTs), and other types of tokenised assets. Cryptocurrencies, such as Bitcoin and Ethereum, function as digital or virtual currencies secured by cryptography. NFTs use blockchain technology to represent ownership of unique digital items, including art, music, and virtual real estate. Digital assets include DeFi
(decentralised finance) platforms that leverage blockchain technology to provide financial services like lending, borrowing, and trading without the need for intermediaries. Tokenisation is another form of digital asset that is revolutionising the world by enhancing efficiency, liquidity, and accessibility, and enabling new business models, reducing costs, and opening investment opportunities to a wider audience.

The use cases for blockchain digital asset technology are continually evolving, extending beyond cryptocurrencies, and driving innovation across multiple sectors. For example, companies are now using blockchain technology to improve transparency and traceability in supply chains by tracking the movement of goods and verifying their authenticity.

In January 2025, the global cryptocurrency market cap stands at approximately $3.6 trillion. Bitcoin remains the dominant cryptocurrency, with a market cap of over $2 trillion, followed by Ethereum and other altcoins. The market has seen significant growth, driven by increased adoption and institutional investment. Donald Trump’s victory in the US presidential election led to a surge in crypto prices, as his administration is perceived to be more favourable towards digital assets. The regulatory environment for digital assets and cryptocurrencies is evolving. President Trump recently signed an executive order aimed at establishing regulatory clarity and promoting the growth of digital financial technology in the United States. The regulatory environment for digital assets in Ireland and Europe is shaped by both national regulations and the EU's Markets in Crypto-Assets Regulation (MiCAR), which aims to provide legal clarity, investor protection, and market integrity across the digital assets landscape. MiCAR entered into force on 29 June 2023. It applies to issuers of Asset-Referenced Tokens and E-Money Tokens from 30 June 2024, and to Crypto-Asset Service Providers from 30 December 2024.

Digital assets bring exciting opportunities but also introduce new challenges and risks that must be carefully considered and addressed. The regulatory landscape for digital assets is still evolving, and changes in regulations can impact market dynamics and create uncertainty. For businesses it brings new complex risk considerations from governance, legal and compliance risks to specific technical risks like smart contact risk, blockchain integrity risk, wallet management risk and cybersecurity risks.

In conclusion, digital assets and cryptocurrencies offer transformative potential for businesses and individuals alike. However, it is crucial to understand the associated risks and navigate the evolving regulatory landscape to fully capitalise on these opportunities. Businesses will need to carefully consider the specific risks associated with blockchain digital asset technology and develop robust processes and controls to ensure secure and effective implementation and use.

Author:Patrick Glover Partner at BDO