The facts speak for themselves. In the US the CFPB Rule 1033, which is about strengthening consumer data rights, is for finalisation by late 2024. Meanwhile, the EU's Digital Operational Resilience Act (DORA) is set to come into force in January 2025. By the end of this year, the review of the crypto-asset market regulations by the Financial Stability Board (FSB) is also expected.

Ignoring these changes might slow investment attraction and create business risks. In this article, we will highlight the key aspects of legal regulation that startups need to pay attention to in order to successfully develop and remain competitive in the upcoming 2025.

Regulations are becoming increasingly complex and diverse

Regulations are becoming more and more strict in general. However, this trend is especially seen in the fintech industry due to the cryptocurrency boom. The industry becomes more complex and needs more rules to exist in harmony with the existing industry. For example, in 2025, the financial sector in Europe and the UK will adopt new regulations, such as DORA and AMLA, which will improve transaction security, cyber resilience, reporting standards, and market competitiveness.

With increasing legislative pressure, it becomes especially important for startups to have a qualified lawyers team or mentors on hand to help make sense of the changing legal landscape. Unfortunately, for startups it means integration of new processes and increased costs. Nevertheless, the change cannot be ignored – ventures would be able to focus on innovation while legal experts monitor changes and ensure compliance with new requirements.

Compliance, KYC, and due diligence are of high stakes

In 2025, legal obedience and reliability will become even more important requirements for gaining investor confidence. Due diligence standards become increasingly tough. Banking institutions and financial organisations will conduct deeper due diligence on startups, which requires them to be as transparent as possible.

That works as well for VC funding. KPMG analysts highlight that investors globally are already conducting more rigorous and prolonged due diligence processes compared to 2021–2022. This will be especially relevant in the areas of payments, lending and cryptocurrencies. Startups have to prepare and obtain the necessary licenses in advance and actively cooperate with regulators to minimise risks.

Strengthen AI regulations

As technology develops, so do the regulations that go with it. Regulatory initiatives like the AI Act will influence the startup ecosystem. It is another area where compliance procedures have to be tracked and implemented in time. That is crucial not only for startups that develop AI solutions but also for all stakeholders that integrate them.

However, startups should not forget about another important aspect to follow in 2025 – the ethics of AI. While the technology offers significant benefits to organizations, the risks associated with unethical adoption are substantial. This makes effective governance critical, placing it high on the agenda for the coming year. Additionally, we can anticipate increased attention and reporting on issues arising from the misuse or mismanagement of AI technologies.

Conclusion

Given the changes of next year, for startups in 2025, compliance with laws and the introduction of reliable legal procedures seem to be one of the decisive success factors. Having a lawyer or an experienced consultant in the team will help minimise risks and comply with legal requirements. Such a successful combination of legal literacy and entrepreneurial energy will be the key to investor confidence and sustainable startup development.