Cryptocurrencies Archives | Digital Watch Observatory

EU introduces updated crypto anti-money laundering framework for 2027

The European Union has adopted new anti-money laundering (AML) rules that will prohibit regulated crypto-asset service providers from supporting privacy-focused cryptocurrencies from July 2027. The measures form part of a broader effort to strengthen oversight of financial activities considered vulnerable to money laundering and illicit finance.

Under the framework, crypto-asset service providers, including exchanges and custodians, will be required to apply enhanced customer due diligence measures to occasional crypto transactions valued at €1,000 or more. Anonymous crypto accounts and services designed to increase transaction anonymity will also be banned within the regulated sector.

Despite the stricter requirements, direct transfers between self-hosted crypto wallets will not be subject to mandatory identity verification obligations. Customer identification obligations will apply primarily when regulated intermediaries are involved, while peer-to-peer transactions conducted without such entities remain outside the scope of the rules.

Beyond digital assets, the regulation introduces a €10,000 cap on commercial cash payments across the EU and expands AML obligations to additional sectors, including professional football, crowdfunding platforms, luxury goods dealers, and investment migration businesses.

New beneficial ownership disclosure requirements will also apply to companies, trusts, and certain non-EU entities operating within the EU.

Why does it matter?

The reforms represent one of the EU’s most significant efforts to create a unified anti-money laundering framework across member states. By introducing common standards for crypto-assets, cash transactions, beneficial ownership transparency and customer due diligence, the rules aim to reduce regulatory fragmentation and strengthen the bloc’s ability to detect and prevent illicit financial activity.

The measures also signal the continued integration of crypto-assets into mainstream financial regulation. While the EU is imposing stricter requirements on regulated intermediaries and anonymity-enhancing services, it is maintaining a distinction between supervised financial activity and peer-to-peer transactions involving self-hosted wallets. The balance struck by the framework may influence future AML approaches in other jurisdictions seeking to regulate digital assets while preserving elements of decentralised finance.

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Japanese retirement fund explores crypto diversification strategy

A Japanese corporate pension fund is reportedly planning to allocate around 1% of its assets to cryptocurrencies from fiscal 2026, in a small but notable step towards digital asset exposure in traditional investment portfolios.

The National Business Corporate Pension Fund, based in Okayama, manages about ¥21.3 billion in assets for roughly 1,200 small and medium-sized enterprises, according to local media reports cited by crypto industry outlets.

The planned allocation would reportedly be made through a passive crypto fund managed by a hedge fund. It forms part of a broader portfolio adjustment aimed at diversifying currency exposure and reducing reliance on yen-denominated assets.

Reported changes for fiscal 2026 include reducing yen holdings while increasing exposure to other currencies, gold and crypto assets.

The move comes as Japan’s financial sector explores a wider role for digital assets. Recent policy developments include legislative efforts to bring crypto assets under the Financial Instruments and Exchange Act, while major Japanese banks are preparing live commercial transactions using a jointly issued stablecoin during fiscal 2026.

The pension fund’s proposed allocation remains small, but it suggests that digital assets are beginning to enter some long-term investment discussions in Japan’s institutional finance sector.

Why does it matter?

The reported allocation is small, but it points to a gradual normalisation of crypto as a diversification tool among some institutional investors. For pension funds, even limited exposure raises questions about risk management, fiduciary duties, volatility, custody and regulatory clarity. In Japan, the story also fits a broader shift towards treating digital assets as part of the regulated financial system, rather than only as speculative retail products.

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Ireland strengthens AML framework with focus on crypto-asset risks

Ireland has launched a new National Risk Assessment and a 30-point action plan aimed at strengthening its response to money laundering, terrorist financing, and proliferation financing risks. The framework identifies crypto-assets as a significant emerging vulnerability, reflecting their increasing use in complex and cross-border financial crime schemes.

The action plan introduces enhanced safeguards for digital finance, including stricter due diligence requirements when crypto-assets are used as a source of funds. The Gambling Regulatory Authority of Ireland has been tasked with developing standards to ensure firms verify the legitimacy and origin of crypto-related funds, with implementation expected by 2027.

Authorities also plan to strengthen supervisory powers, improve transparency around beneficial ownership and enhance coordination between financial crime and tax enforcement bodies. The approach targets evolving criminal methods combining cash-based laundering with digital tools, including crypto-assets and cross-border layering techniques.

The initiative also forms part of Ireland’s preparation for its 2028 international anti-money laundering evaluation.

Why does it matter?

The new framework reflects a broader regulatory shift toward treating crypto-assets as embedded components of financial crime risk rather than isolated instruments. By integrating digital asset controls into its AML framework, Ireland is improving detection of hybrid laundering schemes combining cash flows with blockchain transfers and aligning with international assessments.

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Sweden warns of growing criminal exploitation of digital payment systems

Sweden’s financial regulator, Finansinspektionen, has warned that organised criminal networks are increasingly exploiting weaknesses in payment systems and digital banking infrastructure. The assessment points to a more challenging risk environment driven by faster transactions, cross-border financial flows and increasing technological complexity.

Financial institutions across the Nordic region are expected to adopt more proactive and intelligence-led compliance approaches.

Retail banks remain primary targets because of their high transaction volumes and role in the initial placement of illicit funds. Criminals rely on shell companies and layered ownership structures to conceal beneficial ownership and bypass standard due diligence.

Regulators now expect stronger analytical capabilities and more robust identity verification processes, particularly within automated onboarding systems that may be vulnerable to fraud and mule-account creation.

Payment service providers and crypto-asset platforms are facing increased scrutiny because they enable the rapid movement of funds across jurisdictions. Authorities stress that real-time screening is now essential, as post-transaction analysis is no longer sufficient.

Crypto-related risks are amplified by mixing tools and decentralised systems, requiring strict origin-of-wealth checks and full compliance with travel rule standards.

Supervisory findings also highlight risks from professional enablers and compromised SMEs used to bypass controls. Insider involvement and distressed businesses can mask illicit activity through seemingly legitimate operations.

Finansinspektionen said stronger sanctions screening, continuous monitoring, and executive-level compliance oversight are essential to address evolving money laundering and illicit financing risks.

Why does it matter?

The warning reflects a broader shift in financial crime, where criminal organisations increasingly exploit the speed, scale and interconnected nature of modern financial systems. As digital payments, instant transfers and crypto-assets become more widely used, traditional compliance approaches based on retrospective reviews may struggle to keep pace with rapidly moving illicit funds.

The assessment also highlights the growing convergence of financial regulation, cybersecurity and digital governance. Financial institutions are increasingly expected to deploy advanced analytics, real-time monitoring and stronger identity verification controls to detect criminal activity before transactions are completed. Similar regulatory trends are emerging across Europe and other jurisdictions as authorities seek to strengthen resilience against money laundering, fraud and sanctions evasion.

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Stablecoin issuers face new customer verification requirements under the US GENIUS Act

US financial regulators have proposed new rules requiring certain payment stablecoin issuers to implement bank-style customer identification programmes under the GENIUS Act framework. The proposal would classify permitted stablecoin issuers as financial institutions under the Bank Secrecy Act, expanding compliance obligations to include customer identity verification and anti-money laundering (AML) controls.

Under the joint proposal issued by the Federal Reserve and other federal financial regulators, issuers would be required to collect and verify key customer information, including names, addresses, dates of birth and identification numbers before opening accounts.

Issuers would also be required to adopt risk-based procedures that enable them to reasonably verify customer identities based on their business model, operational scale and onboarding processes.

Regulators clarified that customer identification requirements would apply only to direct relationships between users and issuers, including issuance, redemption, custody and reserve-management services. Secondary market transactions, including user transfers and intermediary activity, would generally fall outside these obligations due to enforcement limitations.

The proposal is now open for public consultation and forms part of wider discussions on the interaction between federal and state regulatory frameworks under the GENIUS Act.

Why does it matter?

The proposal marks another step in integrating stablecoins into the mainstream financial regulatory framework. By applying customer identification and anti-money laundering requirements at the issuer level, regulators are seeking to reduce financial crime risks while allowing stablecoins to operate as regulated payment instruments.

The distinction between direct issuer relationships and secondary-market transactions is also significant. It reflects an attempt to balance compliance requirements with the decentralised nature of blockchain networks, where peer-to-peer transfers and intermediary activity can be difficult to monitor directly. The outcome of the consultation could help shape the future regulatory architecture for digital dollars and influence stablecoin oversight in other jurisdictions.

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Oman launches mandatory national Bitcoin mining pool

Oman has introduced a mandatory state-backed Bitcoin mining pool under its digital asset strategy, requiring all licensed miners to operate through a single national platform. The initiative reflects a broader effort to formalise and centralise crypto mining within a regulated framework while expanding Oman’s industrial-scale digital economy.

The national pool, Omanhash.com, was launched by the Ministry of Transport, Communications and Information Technology in partnership with Frontier Technologies LLC and supported by infrastructure provider Enegix Global.

The platform is expected to aggregate substantial computing power, giving authorities greater visibility into mining output, energy consumption and Bitcoin production within the country.

The framework consolidates existing mining investments that have reached hundreds of millions of dollars in recent years, including large-scale data centre developments in the Salalah Free Zone.

Rather than restricting mining activity, the model integrates it into a controlled national framework designed to support regulatory oversight, reporting and compliance.

Industry participants describe the model as a sovereign mining framework already tested in other jurisdictions, where similar pool structures have been used to integrate taxation and compliance monitoring into mining operations.

Why does it matter?

Oman’s approach represents a notable evolution in how governments engage with cryptocurrency mining. Instead of treating Bitcoin mining as a largely private activity regulated from the outside, the country is integrating mining operations into a state-supervised framework that provides greater visibility over production, energy use and economic activity.

The initiative also raises broader questions about the future relationship between decentralised technologies and state governance. If similar models are adopted elsewhere, governments could gain a more active role in monitoring and shaping participation in blockchain networks while preserving the economic benefits associated with digital asset industries. The outcome may influence future debates on digital sovereignty, crypto regulation and the balance between decentralisation and regulatory oversight.

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Malta launches consultation on regulating decentralised finance under MiCA

Malta’s Financial Services Authority (MFSA) has launched a consultation on how decentralised finance (DeFi) could be incorporated into the European Union’s Markets in Crypto-Assets Regulation (MiCA), focusing on governance, accountability, and the practical definition of decentralisation.

The consultation reflects growing uncertainty over how existing crypto rules should apply to DeFi protocols that combine automated processes with varying degrees of human oversight and control.

Regulators note that while MiCA excludes services operating in a fully decentralised manner without intermediaries, many DeFi protocols retain centralised features such as administrator privileges, upgrade controls and concentrated governance structures.

The MFSA suggests that decentralisation should be assessed along a spectrum rather than treated as a binary concept, raising the possibility of a standardised assessment framework to determine whether a protocol falls within regulatory scope.

The paper also explores whether regulated crypto firms should be required to assess smart contracts, governance structures and risk-management frameworks before integrating DeFi protocols into regulated services.

Additional considerations include legal structures for decentralised organisations and oversight mechanisms such as automated ‘guardian agents’ designed to monitor compliance with predefined governance and predefined risk parameters.

Why does it matter?

The consultation targets one of the most unresolved areas in European crypto regulation: where decentralisation ends, and regulated financial activity begins. Without a clear and consistent definition, DeFi projects can fall into regulatory grey zones that create uneven enforcement across member states and complicate risk supervision for cross-border services.

Establishing whether decentralisation is treated as a spectrum could significantly reshape compliance obligations, determining which protocols must meet MiCA standards and which remain outside its scope, ultimately affecting innovation, investor protection, and regulatory certainty across the EU crypto ecosystem.

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US lawmakers back housing bill with ban on CBDC until 2030

US lawmakers have agreed on a bipartisan housing affordability bill that includes a provision preventing the Federal Reserve from issuing a central bank digital currency (CBDC) until the end of 2030. The measure was incorporated into the 21st Century ROAD to Housing Act, which is primarily focused on increasing housing supply and improving affordability.

The agreement follows months of negotiations between the House and Senate, with the Senate passing its amended version in March 2026 by a vote of 89 to 10. The inclusion of the CBDC restriction reflects longstanding political concerns about privacy, government surveillance and the potential implications of a state-issued digital dollar.

Alongside housing reforms, the legislation seeks to limit the acquisition of single-family homes by large institutional investors, with the aim of improving access for first-time buyers. Lawmakers behind the bill include key bipartisan figures in the Senate Banking Committee, signalling broad support for the package.

Market observers suggest the restriction could benefit private stablecoin issuers by reducing the prospect of competition from a government-backed digital currency. While the measure sets a clear policy direction through 2030, debates over the future of a US CBDC are likely to continue as other countries advance their own central bank digital currency initiatives.

Why does it matter?

The measure represents a significant development in the US debate over digital currencies, effectively delaying any potential retail CBDC issued by the Federal Reserve for several years. It reflects persistent concerns among policymakers about privacy, surveillance and the role of government in digital payments, while signalling growing political support for market-based alternatives.

The decision could also influence the broader global competition around digital currencies. As countries including China, the European Union and several emerging economies continue exploring or deploying CBDCs, the United States appears to be taking a more cautious approach. This may strengthen the role of private-sector solutions such as stablecoins while raising questions about the long-term direction of US digital currency strategy.

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Yen stablecoin planned by Japan’s largest lenders

Japan’s three largest banking groups aim to conduct live commercial transactions using a jointly issued stablecoin during fiscal year 2026, marking a significant step for the country’s regulated digital payments market.

MUFG Bank, Mizuho Bank and Sumitomo Mitsui Banking Corporation said the stablecoin would be issued under a trust agreement, with the three banks acting as joint settlors and a trust bank or similar institution acting as trustee.

The banks have signed a memorandum of understanding to establish a voluntary council to examine operational frameworks, governance, and other requirements for practical implementation. The stablecoin initiative follows a demonstration experiment selected in 2025 by Japan’s Financial Services Agency under its FinTech Proof-of-Concept Hub.

The banks said they plan to accelerate work towards live transactions in fiscal year 2026, while taking account of relevant laws, regulations and market trends. The council will also consider possible collaboration with other financial institutions and stakeholders.

The initiative comes as Japan continues to develop a regulated stablecoin market. Amendments to the Payment Services Act that took effect in June 2023 created a legal framework for fiat-backed stablecoins as electronic payment instruments, while recent rule changes have further clarified conditions for foreign stablecoins and cross-border digital payment activity.

Why does it matter?

The project shows how stablecoin development is moving from crypto-native markets into regulated banking infrastructure. A jointly issued stablecoin by Japan’s largest banks could support payments, settlement and cross-border transactions while keeping issuance within a supervised financial framework. It also signals Japan’s effort to position stablecoins as part of mainstream payment infrastructure rather than a parallel, lightly regulated crypto market.

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Philippine regulator tightens oversight of digital assets

The Bangko Sentral ng Pilipinas has issued new coin and token listing guidelines for virtual asset service providers, setting clearer expectations for due diligence, monitoring and delisting.

The memorandum applies to all VASPs and clarifies how providers should review virtual assets before listing or offering them to customers. The central bank said the guidelines are intended to support financial stability and protect customers by ensuring virtual asset services are provided in a safe, sound and consumer-focused way.

VASPs are expected to assess coins and tokens across six areas: issuer background, market maturity, use cases, transparency, traceability and security, redemption, liquidity and reserves, and legal and compliance considerations.

For asset-backed or fiat-backed tokens, the guidelines call for information on lifecycle processes, reserve composition, reserve verifiability and stabilisation mechanisms. Providers should also assess cybersecurity risks, blockchain traceability, independent audits, legal status in other jurisdictions and potential anti-money laundering risks.

The BSP also requires VASPs to conduct ongoing monitoring of listed assets and define thresholds that would trigger suspension or delisting. Privacy-enhancing virtual assets, also known as privacy coins, remain prohibited from being listed or supported by licensed providers.

Why does it matter?

The guidelines show how crypto oversight is moving from licensing exchanges towards detailed supervision of which tokens can be offered to consumers. By requiring structured due diligence, reserve checks, legal review, cybersecurity assessment and delisting triggers, the Philippines is aligning digital asset oversight more closely with risk management and consumer protection. The stablecoin-related checks are especially relevant as regulators globally focus on reserve quality, redemption rights and market stability.

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