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Japan finalises rules for cryptoasset service intermediaries

Japan’s Financial Services Agency has finalised regulatory amendments linked to the 2025 revision of the Payment Services Act, creating a new intermediary category for electronic payment instruments and cryptoasset services.

The amendments, which enter into force on 1 June 2026, establish rules for the newly created electronic payment instrument and cryptoasset service intermediary business. The framework sets out registration application requirements, information that must be clearly explained or provided to users, prohibited conduct, user protection measures, and record-keeping obligations.

The new category allows intermediaries to provide certain electronic payment instruments and cryptoasset-related services without operating as full electronic payment instrument service providers or cryptoasset exchange service providers. The structure is intended to support intermediary activity while maintaining user protection and oversight requirements.

The wider amendment package also develops rules for electronic payment instruments and cryptoassets, including the scope of assets that may be subject to domestic holding orders for electronic payment instrument service providers and cryptoasset exchange service providers.

The FSA also finalised related provisions on funds transfer services, banks, insurance companies and their subsidiaries, and other required amendments. Public consultation on the relevant cabinet orders, cabinet office orders, notices and guidelines drew 259 comments from 62 individuals and organisations.

The amendments form part of Japan’s ongoing effort to refine its digital finance framework as cryptoassets, stablecoin-related services, payment intermediaries, and traditional financial institutions become increasingly interconnected.

Why does it matter?

Japan’s new intermediary category shows how regulators are creating more tailored frameworks for different roles in digital asset services. Rather than treating every participant as a full exchange or electronic payment instrument service provider, the framework gives intermediaries a defined route into the market while preserving registration, conduct, disclosure, and user protection requirements.

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Brazil raises compliance bar for virtual asset companies

Brazil’s Central Bank has introduced a new requirement for virtual asset service providers seeking authorisation to operate in the country.

From 1 June 2026, companies applying to operate as sociedades prestadoras de serviços de ativos virtuais, or SPSAVs, must submit a reasonable assurance report issued by an independent auditor registered with Brazil’s securities regulator, the Comissão de Valores Mobiliários.

The audit requirement is intended to assess whether applicants have adequate compliance and control structures in place. Reviews will focus on anti-money laundering and counter-terrorist financing measures, including governance arrangements, client verification procedures, internal risk controls, and mechanisms to prevent misuse of virtual asset services.

The measure builds on Brazil’s broader virtual asset regulatory framework, established under Law No. 14,478 of 2022 and further developed through Central Bank resolutions issued in 2025. Those rules created a dedicated category for virtual asset service providers and placed their authorisation and supervision under the Central Bank.

The Central Bank said the new audit requirement is designed to strengthen security and efficiency in Brazil’s financial system while supporting the development of the country’s virtual asset market. The measure is also intended to align supervision with stronger standards for governance, transparency, internal controls, and financial crime prevention.

The additional requirement is expected to increase compliance costs for applicants, but it also signals that Brazil is moving towards more structured and bank-like oversight of crypto service providers.

Why does it matter?

Brazil’s move shows how crypto regulation is shifting from basic registration towards deeper supervisory checks. By requiring independent assurance over compliance controls before authorisation, the Central Bank is placing greater emphasis on AML/CFT, governance, client protection, and operational integrity. For virtual asset firms, market access will increasingly depend not only on business activity but also on whether internal controls can withstand external review.

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European Investment Bank backs Allegro for AI expansion

The European Investment Bank has agreed to provide Polish e-commerce platform Allegro with a PLN 1 billion loan to support research, development, and AI initiatives.

The financing marks the largest private-sector research and development programme backed by the EIB in Poland and is intended to support Europe’s digital competitiveness and digital sovereignty.

The funding will cover nearly 40% of Allegro’s planned expenditure on research, development, and innovation in the coming years. The company plans to expand its use of AI, improve customer services, develop next-generation delivery systems, and strengthen its digital marketplace.

The investment forms part of the EIB Group’s TechEU initiative, which aims to support investment in strategic technologies, including AI, clean technology, and quantum computing. Allegro said the financing will support work by software engineers, data scientists, and AI specialists, while helping the company develop new algorithms, models, and system architectures.

Allegro is one of Europe’s largest homegrown online marketplaces and controls about a third of the Polish market. It is also expanding in Czechia, Slovakia, and Hungary, giving small and medium-sized enterprises access to new customers across the region.

The EIB said planned investments in several technical centres in Poland would also support social and territorial cohesion in the EU.

Why does it matter?

The loan shows how EU-backed financing is being used to support AI adoption and digital innovation in European platform companies. For the EIB, the Allegro deal fits into a wider push to strengthen Europe’s digital and industrial competitiveness through investment in strategic technologies. For Central and Eastern Europe, it also supports regional digital infrastructure, technical skills, and marketplace innovation.

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ECB cautions that stablecoins could affect monetary sovereignty

Stablecoins could enable faster payments, lower transaction costs, and more efficient settlement, but may also create risks for financial stability, monetary policy, and monetary sovereignty, according to European Central Bank Executive Board member Isabel Schnabel.

Speaking at the Bank of Korea International Conference on Central Banks and the Future of Money, Schnabel compared the rise of stablecoins with the earlier emergence of money market funds. Both offer alternatives to traditional bank deposits and operate outside the banking system, but stablecoins also function as payment and settlement tools.

Schnabel said stablecoins could contribute to a new wave of bank disintermediation if households and firms replace bank deposits with stablecoin holdings. That could make banks more reliant on wholesale funding and leave their liabilities more concentrated, rate-sensitive, and volatile.

Financial stability risks remain a key concern. Stablecoins can be vulnerable to runs if confidence in their reserve assets weakens, while large-scale redemptions could trigger fire sales or spillovers into sovereign debt and broader fixed-income markets. Schnabel noted that the largest US dollar-pegged stablecoins are now approaching the size of the largest US money market funds.

Stablecoins may also affect monetary policy transmission. Their wider adoption could change bank funding conditions, influence demand for short-term government securities, and create uncertainty over how policy rate changes pass through to financial conditions and the real economy.

Schnabel also warned that stablecoins could further strengthen the US dollar’s international role. Most stablecoins in circulation are dollar-denominated, and wider use could deepen dollar-based payment and settlement networks, particularly in jurisdictions with weaker monetary credibility.

The ECB sees regulation, digital payment infrastructure, and central bank digital currency as part of the response. Schnabel said the Eurosystem’s strategy includes a digital euro for retail payments and tokenised central bank money for wholesale settlement, preserving central bank money as the anchor of trust while supporting private innovation.

Why does it matter?

The speech frames stablecoins as a question of monetary architecture, not only crypto-market innovation. If stablecoins become widely used for payments and settlement, they could shift deposits away from banks, affect monetary policy transmission, create new run risks, and reinforce dollar-based financial networks. For central banks, the policy challenge is to support innovation while ensuring that public money remains the trusted settlement anchor of the financial system.

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European Commission fines Temu €200 million under DSA

The European Commission has imposed a €200 million fine on Temu after finding that the online marketplace breached obligations under the Digital Services Act by failing to properly assess and mitigate systemic risks linked to illegal products sold to consumers in the EU.

According to the Commission, Temu’s 2024 risk assessment did not meet DSA requirements because it relied on general information about the wider e-commerce sector rather than evidence specific to its own platform. Regulators also found that the company significantly underestimated the likelihood that the EU consumers would encounter illegal or unsafe products.

The investigation drew on mystery shopping exercises and information from customs and market surveillance authorities. Findings included chargers that failed basic safety requirements and baby toys that contained chemicals above legal limits or presented choking hazards.

Regulators also criticised Temu for failing to sufficiently assess how recommender systems and influencer promotion programmes could contribute to the spread of illegal products on the platform.

Temu must now submit a detailed action plan explaining how it will address the shortcomings identified by the Commission. The plan will be reviewed with the European Board for Digital Services before implementation requirements are set. Failure to comply could lead to additional penalties under the DSA.

The decision is part of a wider Commission investigation into Temu, including issues related to potentially addictive design, recommender systems, and data access for researchers.

Why does it matter?

The fine marks one of the most significant enforcement actions under the Digital Services Act against a major online marketplace. It shows that the DSA is being used not only to address illegal content, but also to require platforms to assess and reduce consumer safety risks linked to illegal and unsafe goods. The case reinforces the EU’s focus on proactive risk management by very large online platforms, including how marketplace design, recommendations, and influencer promotion can amplify the reach of harmful products.

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ECB warns digital money must evolve to preserve financial stability

The European Central Bank has said central bank money must evolve to remain relevant in an increasingly digital financial system.

Speaking in Frankfurt, Piero Cipollone, Member of the ECB’s Executive Board, said digitalisation is reshaping retail payments, wholesale financial markets, and cross-border payment infrastructure across the euro area. He warned that if central bank money does not adapt to technological change, it risks losing relevance in key parts of the economy, weakening public money’s role as an anchor of stability and increasing fragmentation in the financial system.

Retail payments are becoming more digital and platform-based, while wholesale financial markets are being shaped by tokenisation and distributed ledger technology. Cipollone said digitalisation could help reduce costs and speed up cross-border payments if it is used in a way that avoids further fragmentation.

The ECB’s policy response is built around three areas: preparing for a possible digital euro for retail payments, enabling DLT-based transactions to settle in central bank money, and interlinking fast payment systems to improve global cross-border transactions.

Cipollone said the digital euro would be designed as a digital form of cash for day-to-day retail payments, not as an investment product. He said it would complement physical cash and private payment solutions while ensuring that people retain access to a public digital payment option across the euro area.

For wholesale markets, the ECB said tokenisation could make capital markets more efficient, but only if tokenised settlement assets are available. The Eurosystem plans to allow DLT-based transactions to settle in central bank money from September 2026 through its Pontes project, while its Appia work will develop a longer-term vision for Europe’s tokenised financial ecosystem.

Cross-border payments remain a concern because they are still too slow, costly, and opaque. The ECB said interlinking fast payment systems could help reduce these frictions while protecting the monetary sovereignty of participating jurisdictions.

Why does it matter?

The speech frames digital money as a financial stability and sovereignty issue, not only a payments innovation story. As payments, markets, and cross-border settlement become more digital and tokenised, the ECB wants central bank money to remain the risk-free settlement asset, anchoring trust in the financial system. The message is also a response to the risk that private platforms, stablecoins, and fragmented infrastructures could weaken the uniformity of public money if central banks fail to adapt.

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Financial institutions adopt stricter monitoring than crypto exchanges

A Chainalysis analysis of crypto compliance monitoring shows that transaction surveillance standards across financial institutions and crypto firms have tightened significantly since 2020.

The report says nearly half of organisations onboarded in 2026 now operate at alerting standards that would have placed them among the top 10% for alerting strictness in 2020. Chainalysis said newer entrants are launching with more aggressive Know Your Transaction monitoring configurations, reflecting the maturation of digital asset compliance frameworks.

According to the analysis, traditional financial institutions generally apply stricter detection thresholds than crypto exchanges. Financial institutions set lower dollar-detection floors for both illicit and non-illicit categories, meaning they are alerted for smaller sums and apply a more conservative monitoring approach.

The gap is particularly visible in indirect exposure to non-illicit flows. Chainalysis said crypto exchanges set average alerting minimums of USD 950, compared with USD 150 for traditional financial institutions. For illicit funds, both groups apply tighter thresholds, with exchanges setting alerts from USD 100 and financial institutions from USD 55.

The report also highlights a persistent gap between direct and indirect exposure monitoring. Direct exposure refers to funds arriving immediately from a known illicit source, while indirect exposure covers funds that pass through intermediary addresses before arriving at the final destination. Chainalysis said direct monitoring has become more standardised, but indirect exposure thresholds often remain 10 to 20 times higher than direct thresholds in categories such as ransomware, fraud shops, scams, darknet markets, and sanctioned jurisdictions.

Regional differences also remain. Chainalysis said direct exposure monitoring is broadly uniform across regions, while indirect exposure thresholds vary more significantly. EMEA organisations generally apply the strictest and most concentrated thresholds, while APAC organisations show more lenient and varied configurations.

Chainalysis said the findings show a compliance sector in transition, with stronger direct exposure monitoring but continuing inconsistency in how organisations treat indirect risk.

Why does it matter?

The findings point to a maturing crypto compliance environment, especially as traditional financial institutions expand into digital assets. However, the persistent gap in indirect exposure shows that illicit actors may still find room to exploit inconsistent monitoring practices. As funds move through intermediary wallets and cross-regional networks, calibration of indirect risk controls is becoming a key issue for regulatory defensibility, counterparty due diligence, and institutional trust in digital asset markets.

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Argentina bill tightens crypto gambling rules

Argentina’s national government has sent Congress a bill aimed at regulating online gambling, preventing gambling addiction, and blocking financial and technical support for unauthorised betting platforms.

The bill, titled the Law on the Prevention of Gambling Addiction and Regulation of Online Gambling, would coordinate action between several state bodies, including the Central Bank of Argentina, the National Securities Commission, the National Communications Agency, and NIC Argentina.

The proposal would prohibit financial institutions, payment service providers, and virtual asset service providers from offering services to unauthorised gambling operators. It would also allow NIC Argentina to suspend, disable, or remove domains reported by competent authorities in relation to illegal gambling.

The bill also restricts the promotion, sponsorship, and dissemination of illegal gambling platforms across television, radio, public spaces, social networks, and digital environments. Media companies, agencies, and content creators would be required to verify that promoted operators have official authorisation. Measures to protect minors are also included.

Authorised platforms without effective technological systems to identify age and exclude minors would be prohibited from operating financially. The Central Bank would also be required to block money transfers from accounts linked to minors to gambling operators.

The proposal would amend the Criminal Code to introduce prison terms of three to six years for those operating unauthorised betting systems. It would also create a new offence, punishable by two to four years in prison, for those who provide essential financial, technological, advertising, or digital services to unauthorised operators.

The bill follows growing scrutiny of online betting and prediction markets in Argentina and abroad, including earlier action against Polymarket for alleged unlicensed gambling.

Why does it matter?

The proposal shows how governments are targeting the infrastructure that enables illegal online gambling, including payment systems, domain names, advertising channels, and crypto-related services. By including virtual asset service providers, Argentina is treating crypto payment rails as part of the regulated gambling ecosystem when they are used to support unauthorised betting platforms. That could raise compliance expectations for crypto firms, payment providers, media companies, and online platforms.

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ECB highlights tokenisation progress in cross-border payments

Project Agorá, led by the Bank for International Settlements and the Institute of International Finance, has demonstrated how tokenisation and programmable technologies could help address long-standing inefficiencies in wholesale cross-border payments.

Using a dedicated prototype, the project executed atomic settlement across multiple currencies and jurisdictions, allowing cross-border transactions to settle simultaneously and indivisibly.

The project used tokenised central bank reserves and tokenised commercial bank deposits as settlement assets within a tokenised ecosystem. According to the European Central Bank, the findings show that the safety and integrity of wholesale cross-border payments can be preserved while modernising settlement infrastructure.

The Eurosystem, comprising the ECB and the central banks of the 21 euro area countries, participates in Project Agorá, which the BIS and the IIF run with leading central banks and more than 40 financial institutions. The next phase of the project will focus on real value testing.

Insights from the project will support the Eurosystem’s Appia and Pontes initiatives, both designed to strengthen Europe’s tokenised financial ecosystem. Pontes is expected to link market distributed ledger technology platforms with TARGET Services by September 2026, while Appia will outline the longer-term vision for a European tokenised financial ecosystem.

The ECB said the initiatives form part of a unified strategy to foster innovation, strengthen cross-border financial integration, and bolster Europe’s financial sovereignty.

Why does it matter?

Project Agorá shows how central banks and financial institutions are testing tokenisation to modernise cross-border payments without moving outside regulated financial infrastructure. For Europe, the link to Pontes and Appia is especially important because it connects global experimentation with the Eurosystem’s own plans for DLT settlement, TARGET Services, financial integration, and financial sovereignty.

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Belarus expands crypto role in financial system with new asset recognition

Belarus has expanded the role of digital assets in its financial system by recognising cryptocurrencies, including Bitcoin, as underlying assets in non-deliverable over-the-counter financial instruments.

The decision, issued by the Council of Ministers and the National Bank of the Republic of Belarus, marks another step in the country’s effort to integrate digital tokens into regulated financial market activity.

The updated framework allows cryptocurrencies, alongside futures, interest rates, stock indices, and other reference assets, to be used in cash-settled contracts rather than through delivery of the underlying asset. Such instruments allow investors to gain exposure to price movements without directly holding the asset itself.

Authorities are positioning the change as a way to expand investment opportunities and deepen the use of digital assets within the wider economy. Belarus has already developed a broader regulatory framework for digital tokens, including rules covering crypto-related banking services, mining, trading, and token operations.

The move reflects a wider trend of bringing crypto exposure into conventional financial structures, rather than treating digital assets as entirely separate from regulated markets. However, the change is narrower than full integration of cryptocurrencies into the financial system, as it applies specifically to their use as reference assets in cash-settled OTC instruments.

Why does it matter?

Belarus’ decision shows how crypto assets are being incorporated into more traditional financial products through regulated exposure rather than direct ownership. The change could broaden access to crypto-linked instruments while keeping settlement within conventional financial channels. It also illustrates a broader regulatory trend in which digital assets are increasingly treated as reference assets for financial contracts, rather than solely as standalone tokens traded on crypto platforms.

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