Welcome to the October 2025 edition of the Freshfields FS Insights newsletter, which contains a selection of thought leadership related to the financial services industry published over the past month by Freshfields lawyers from around the world, as well as upcoming dates for your diary. If you would like more information regarding any of these developments, please get in touch with your usual Freshfields contact.

Cryptoassets

FCA publishes proposals and invites discussion on applying its Handbook to cryptoasset firms

The UK Financial Conduct Authority (FCA) published a consultation and discussion paper on 17 September 2025 outlining its proposals for applying the rules and guidance in its Handbook to cryptoasset firms (CP25/25). The proposed rules would apply to firms that have obtained authorisation to carry on the new regulated cryptoasset activities set out in the April 2025 draft Statutory Instrument (SI), once the SI is in force.

The FCA is also seeking feedback on the application of specific rules to cryptoasset firms, together with setting out some early thoughts on the application of those rules. Responses to the discussion elements of CP25/25 will inform the proposals set out in future consultation papers that are due to be published under the Crypto Roadmap.

CP25/25 includes a consultation on the application rules and guidance in some of the cross-cutting Handbook areas to cryptoasset firms and a discussion on how the FCA can apply the Consumer Duty, conduct of business rules, product governance rules, the Dispute Resolution rules and access to the Financial Ombudsman Services.

For more information on the proposed rules set out in CP25/25, see our blog post. For analysis of the two discussion chapters in CP 25/25, which appear to be open to a wider variety of approaches, see our separate blog post.

Hong Kong Stablecoins Ordinance overview

The Stablecoins Ordinance, which provides a statutory framework for the regulatory regime applicable to stablecoins in Hong Kong, was passed by the Legislative Council on 21 May 2025 and came into effect on 1 August 2025. The Ordinance outlines the key regulatory requirements for issuing and offering stablecoins in Hong Kong. The Regime primarily regulates stablecoins that are “pegged to” (i.e., purport to maintain a stable value with reference wholly to) (i) one or more official currencies, (ii) one or more units of account or stores of economic value specified by the Hong Kong Monetary Authority (the HKMA), or (iii) a combination of (i) and (ii). The Regime also applies to stablecoins that are a digital representation of value specified by the HKMA, which provides a degree of flexibility to regulate stablecoins referencing other value-linked digital assets (e.g., commodity, financial or physical assets which may have been digitalised). For a high-level overview of these requirements, see our briefing.

UK FCA cuts restrictions, keeps protections for complex and high-risk investment distribution

On 8 September 2025, Claire Harrop, a partner in the Freshfields London office and its UK head of fintech, was quoted in an article in Thomson Reuters Regulatory Intelligence which looks at how the FCA pairs broader retail access with tougher obligations: crypto exchange-traded notes (ETNs) reopen to retail on 8 October 2025, while a multi-firm review examines whether complex, daily-reset exchange-traded products are sold with real understanding and fair value. In the article, Claire emphasises robust appropriateness testing on execution-only sales.

The road to CRD 6 in Germany

The German version of red tape for M&A in the financial services sector

After much anticipation, the German Ministry of Finance finally published its draft act implementing Directive (EU) 2024/1619 (CRD 6) on 22 August 2025. The draft act generally envisages a 1:1 implementation of CRD 6. This also applies to the new requirements in relation to qualifying holding procedures (QHPs) and the new notification and approval requirements in relation to the acquisition or divesture of material holdings, material transfers of assets and liabilities as well as mergers and divisions. For an overview of the German implementation and a discussion of areas for improvement, see our blog post.

The German implementation of key requirements for ESG risk management

A key aspect of CRD 6 is the focus on the integration of environmental, social and governance (ESG) factors in the risk management of European banks. It should be remembered that the management of ESG risks has been on the agenda of supervisory authorities for some time and is therefore nothing new for banks. CRD 6 marks the (provisional) end of this development and “formalises” many requirements that already existed in practice as expectations of the supervisory authorities. However, CRD 6 goes further in some respects. For an overview of the key requirements that the German Ministry of Finance’s draft act introduces with respect to the management of ESG risks, see our blog post.

Fintech

Chartering a new path toward banking: how the rise of novel charters is reshaping the regulatory perimeter for fintechs, payments companies, and others

Trends converging in recent months have the potential to reshape the operating environment for fintechs, digital asset and payments companies, and other nonbank financial firms in the United States, in important ways. These include: persistent and growing consumer demand for new ways to access financial services, especially through digital channels; the continued maturation and integration of fintech business models into traditional banking and payments ecosystems; and congressional efforts to clarify rules of the road for digital assets and stablecoins. But one trend stands out for its potential to effect lasting changes to the sector: the rise of “novel” charter types that allow nonbank firms to expand their products and services, and access many of the privileges associated with a banking charter, without in fact becoming a “true” bank. 

At both the federal and state levels, alternative regulatory chartering options are on the rise, no doubt bolstered by the second Trump administration’s pro-innovation (and pro-crypto) posture and leaders of the federal financial regulators emphasizing their openness to novel business models. Although many of these charter types are not new, most have seen new life in 2025. To take one example, no fewer than seven fintech, crypto, and payments companies have applied for a national trust bank charter in recent months. We expect this trend to accelerate in the near term, especially as rules to implement the GENIUS Act are finalized and agencies begin accepting applications for stablecoin issuer licenses.

For a survey of novel federal and state charter types, outlining their key features, recent developments, and opportunities and challenges for companies with—or aspiring to—these charters, see our blog post.

Private funds

Private capital goes retail: the global push to democratize access to private capital investments

As retail investor access to private capital gains global momentum, stay informed with our latest “Well-Caffeinated” podcast, in which Freshfields partners Tim Clark, Mary Lavelle (Global Co-Chairs, Private Funds and Secondaries) and Ivet Bell (Private Funds and Secondaries partner) delve into key market and regulatory shifts, including potential U.S. regulatory changes that will facilitate "retail investor” investment in private capital investments through 401(k)s.

Practical compliance takeaways for private fund managers in light of recent SEC enforcement action alleging overcharging fees and conflicts of interest

On 15 August 2025, the U.S. Securities and Exchange Commission (SEC) settled an enforcement action, TZP Associates, LLC, IA Rel. No 6908, that alleged an investment adviser overcharged private funds for management fees by improperly determining fee offsets and failed to disclose conflicts of interest.  The TZP settlement is similar to actions brought by the SEC during the tenures of prior leadership that alleged improper fee charging practices and serves as reminder to private fund managers regarding the importance of maintaining an effective compliance program with respect to its fee-billing practices. For more information, see our blog post.

APP fraud

Further developments on the retrieval duty in the context of APP fraud

The retrieval duty has resurfaced in the High Court’s recent judgment in Barclay-Ross v Starling Bank Limited. The possibility of banks owing a “retrieval duty”, or a duty which requires them to take steps to retrieve a customer’s money after being notified of fraud, was first suggested by the Supreme Court in Philipp v Barclays Bank plc. In Santander UK PLC v CCP Graduate School Ltd, the High Court rejected an argument that in the context of authorised push payment (APP) fraud a receiving bank owed the duty to another bank’s customer to retrieve funds. In this latest case, the retrieval duty was not originally pleaded against the sending bank, but the Court suggested that it should be and allowed that part of the case to continue to trial. The further consideration of the retrieval duty in this case at trial will be of interest to retail banks, given the potential route to compensation it might offer for APP fraud victims. For more information, see our blog post.

Payments

Reshaping UK payments regulation: HM Treasury consults on consolidating the PSR within the FCA

The UK's payments landscape is on the cusp of significant regulatory change. In March 2025, the UK government announced that it would abolish the Payment Systems Regulator (PSR) and consolidate its functions within the FCA. HM Treasury launched a consultation on 8 September 2025 regarding the details of how that consolidation would be achieved. On the face of it, a reduction in the number of regulators is to be welcomed. However, it seems that little will change in practice as the government has adopted a “lift and shift” approach and has not taken the opportunity to streamline the regime. For more information, see our blog post.

UK prospectus regime

UK prospectus regime reform – key changes ‎for regulated market issuers in the FCA’s ‎final rules

On 15 July 2025, the FCA published Policy Statement PS25/9: “New rules for the public offers and admissions to trading regime”. PS25/9 sets out the FCA’s final rules for the admission of securities to trading on UK regulated markets and UK primary multilateral trading facilities under The Public Offers and Admissions to Trading Regulations 2024 (POATRs).

We have published two briefings on PS25/9. Our first briefing considers the core areas in which the FCA has made changes relevant for issuers with, or seeking admission of, equity and non-equity securities – such as shares and bonds – to trading on UK regulated markets. Our follow-on briefing reflects on changes in the FCA’s new rules that are specific to non-equity securities (such as bonds), including measures to encourage wider participation of retail investors. This briefing goes beyond the UK regulated market and considers reforms relevant to issuers that have their securities admitted to trading on the London Stock Exchange’s International Securities Market.

Dates for your diary

IA webinar: ESG enforcement and litigation risks in asset management

With the recent turmoil in the global markets, ESG may not necessarily be front and centre of most fund managers’ current agendas. However, ESG risk is at an all-time high for the asset management industry given all of the recent regulatory enforcement and the likelihood of associated litigation – and added to that, in tumultuous times, a firm’s ESG credentials or ESG targets may be placed under increased scrutiny as investors perceive it as a potential avenue to recoup losses where there has been poor performance. 

On 30 October 2025, the Investment Association (IA) will be hosting a webinar in which Anthea Bowater, Piers Reynolds, Simon Orton, and Maisie Stewart from the Freshfields dispute resolution practice in London will cover the key ESG litigation and enforcement risks that asset managers face in today’s world, including in relation to allegations of greenwashing, risks around transition planning, fiduciary duties and the prospect of NGOs bringing actions against industry players to reduce their global emissions. They will explain which types of risk are particularly acute for particular businesses.

Anyone in a legal or sustainability team in a regulated firm, or in any other team involved with sustainable reports, products or complaints handling, should attend. For more information and to register, click here.