A significant shift away from global views on central bank digital currencies has been made with the decision to allow China’s digital yuan to earn interest starting in January 2026. Wallet balances will now accrue interest at demand deposit rates, marking a shift from the widely held view that retail CBDCs should function purely as digital cash.
Central banks in Europe and the United States have long argued against interest-bearing CBDCs, warning they could destabilise financial systems by drawing deposits away from commercial banks.
Institutions such as the European Central Bank, the Federal Reserve and the Bank for International Settlements have stressed that digital currencies should not become savings instruments.
China’s move, however, effectively repositions the digital yuan closer to a deposit-like form of money rather than a simple cash substitute.
The policy applies to verified individual and corporate wallets, while anonymous wallets remain excluded. Digital yuan balances are also now covered by China’s deposit insurance scheme, offering the same protection as bank deposits.
Analysts say these design choices, combined with China’s two-tier distribution model that keeps commercial banks as intermediaries, aim to limit risks of bank disintermediation while encouraging wider adoption.
China’s decision could influence global debates as dozens of countries continue to explore the use of digital currencies. While Europe remains committed to a non-interest-bearing digital € and the United States has formally banned a retail CBDC, China is testing whether an interest-paying digital currency can coexist with traditional banking.
The experiment is likely to be closely watched as policymakers reconsider what role digital money should play in future financial systems.
Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!
The Bank of Russia has reiterated its confidence in the long-term potential of the digital ruble, describing the project as one of the most advanced central bank digital currency initiatives globally.
According to the regulator, preparations for a large-scale rollout remain on track for 2026, with internal estimates suggesting the digital ruble could represent up to 5% of all cashless payments within seven years of launch.
Central bank officials highlighted smart contracts as a primary area of application, alongside budgetary payments and cross-border transaction mechanisms, where efficiency and transparency gains are expected.
The regulator added that global payment trends are being closely monitored. Officials stressed the importance of defining a clear role for each financial instrument rather than introducing technology without a specific economic purpose.
Bank of Russia officials also emphasised ongoing collaboration with market participants to identify new opportunities for the digital ruble and maximise its practical impact.
Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!
China’s central bank has confirmed that a revised digital yuan framework will enter force on 1 January 2026, redefining the e-CNY as a form of digital deposit money rather than a cash substitute.
The upgraded framework adds new standards and rules, based on a decade of domestic and cross-border pilot programmes. Usage already spans retail payments, public services, healthcare, education, tourism, and international settlements.
Under the new plan, digital yuan balances held in commercial bank wallets will be classified as bank deposit liabilities. Banks must pay interest on these holdings, which will be insured and included in regular asset-liability management.
Digital yuan operations will also be folded into China’s reserve requirement system. Wallet balances at authorised banks will count towards reserve calculations, while non-bank payment institutions must hold full reserves against the digital yuan they administer.
By late November 2025, cumulative transactions had reached 3.48 billion, with a total value of 16.7 trillion yuan.
Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!
A recent SmartAsset study based on IRS tax return data highlights sharp regional differences in Bitcoin participation across the US. Crypto engagement is concentrated in certain states, driven by income, tech adoption, and local economic culture.
Washington leads the rankings, with 2.43 per cent of taxpayers reporting crypto transactions, followed by Utah, California, Colorado and New Jersey. These states have strong tech sectors, higher incomes, and populations familiar with digital financial tools.
New Jersey’s position also shows that crypto interest extends beyond traditional tech hubs in the West. At the opposite end, states such as West Virginia, Mississippi, Kentucky, Louisiana and Alabama record participation close to or below one per cent.
Lower household incomes, smaller tech industries and a preference for conventional financial products appear to limit reported crypto activity, although some low-level holdings may not surface in tax data.
The data also reflects crypto’s sensitivity to market cycles. Participation surged during the 2021 bull run before declining sharply in 2022 as prices fell.
Higher-income households remain far more active than middle-income earners, reinforcing the view that Bitcoin adoption in the US is still largely speculative and unevenly distributed.
Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!
Sberbank has issued Russia’s first crypto-backed loan, providing financing to Intelion Data, one of the country’s largest Bitcoin miners. The bank did not disclose the loan size or the cryptocurrency used as collateral but described the move as a pilot project.
The loan leveraged Sberbank’s own cryptocurrency custody solution, Rutoken, ensuring the digital assets’ safety throughout the loan period. The bank plans to offer similar loans and collaborate with the Central Bank on regulatory frameworks.
Intelion Data welcomed the deal, calling it a milestone for Russia’s crypto mining sector and a potential model for scaling similar financing across the industry. The company is expanding with a mining centre near the Kalinin Nuclear Power Plant and a gas power station.
Sberbank has also been testing decentralised finance tools and supports gradual legalisation of cryptocurrencies in Russia. VTB and other banks are preparing to support crypto transactions, while the Central Bank may allow limited retail trading.
Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!
Trust Wallet has urged users to update its Google Chrome extension after a security breach affecting version 2.68 resulted in the theft of roughly $7 million. The company confirmed it will refund all impacted users and advised downloading version 2.69 immediately.
Mobile users and other browser extension versions were unaffected.
Blockchain security firms revealed that malicious code in version 2.68 harvested wallet mnemonic phrases, sending decrypted credentials to an attacker‑controlled server.
Around $3 million in Bitcoin, $431 in Solana, and more than $3 million in Ethereum were stolen and moved through centralised exchanges and cross‑chain bridges for laundering. Hundreds of users were affected.
Analysts suggest the incident may involve an insider or a nation-state actor, exploiting leaked Chrome Web Store API keys.
Trust Wallet has launched a support process for victims and warned against impersonation scams. CEO Eowyn Chen said the malicious extension bypassed the standard release checks and that investigation and remediation are ongoing.
The incident highlights ongoing security risks for browser-based cryptocurrency wallets and the importance of user vigilance, including avoiding unofficial links and never sharing recovery phrases.
Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!
The European Union’s new tax-reporting directive for crypto assets, known as DAC8, takes effect on 1 January. The rules require crypto-asset service providers, including exchanges and brokers, to report detailed user and transaction data to national tax authorities.
DAC8 aims to close gaps in crypto tax reporting, giving authorities visibility over holdings and transfers similar to that of bank accounts and securities. Data collected under the directive will be shared across EU member states, enabling a more coordinated approach to enforcement.
Crypto firms have until 1 July to ensure full compliance, including implementing reporting systems, customer due diligence procedures, and internal controls. After that deadline, non-compliance may result in penalties under national law.
For users, DAC8 strengthens enforcement powers. Authorities can act on tax avoidance or evasion with support from counterparts in other EU countries, including seizing or embargoing crypto assets held abroad.
The directive operates alongside the EU’s Markets in Crypto-Assets (MiCA) regulation, which focuses on licensing, customer protection, and market conduct, while DAC8 ensures the tax trail is monitored.
Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!
The Central Bank of Russia has introduced a detailed proposal aimed at bringing cryptocurrencies under a unified regulatory framework, marking a significant step towards formal legal recognition of digital assets.
Under the proposal, both qualified and non-qualified investors would be permitted to purchase cryptocurrencies. Investor status would be determined by factors such as education, professional background, income level, and asset holdings.
Non-qualified investors would be restricted to buying up to 300,000 roubles worth of crypto per year through authorised intermediaries.
Digital currencies and stablecoins would be classified as currency values under Russian law, yet their use as a means of payment for goods and services would remain prohibited. The framework maintains the state’s long-standing opposition to domestic crypto payments.
Russian residents would also gain the right to purchase and transfer crypto assets abroad, provided such transactions are reported to the Federal Tax Service. The central bank aims to finalise the legislative groundwork by 1 July 2026.
Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!
Ghana has formally legalised Bitcoin and cryptocurrency trading after parliament approved the Virtual Asset Service Providers Bill, 2025, closing a long-standing regulatory gap in the country’s digital asset market.
The legislation establishes a licensing and supervisory regime for crypto businesses under the Bank of Ghana. The central bank will oversee the sector, prioritising consumer protection and financial stability, while unlicensed operators may face sanctions or closure.
Under the new framework, individuals can trade crypto legally, while companies must meet reporting and compliance requirements. Officials say the law responds to fraud and money laundering risks while acknowledging the scale of crypto adoption nationwide.
Around 3 million Ghanaians have used cryptocurrency, with transactions totalling roughly $3 billion by June 2024. Licensing rules will be introduced gradually in 2026, as Ghana aligns with a broader African shift toward formal crypto regulation.
Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!
The US crypto market saw a significant shift in 2024 as the Securities and Exchange Commission authorised the first crypto-asset-backed exchange-traded funds (ETFs).
Regulated ETFs allowed institutional investors, including hedge funds and banks, to invest in Bitcoin and Ether, with assets reaching USD 115 billion and USD 17 billion, respectively, by November 2025.
Nearly 2,000 institutional investors gained exposure to Bitcoin ETFs in 2024, accounting for approximately 30% of the market by year-end. Hedge funds and asset managers led investments, while major banks acted as market makers and asset managers, boosting crypto-ETF growth.
The SEC’s 2025 authorisation of direct crypto-asset exchanges between broker-dealers and ETF issuers also enhanced market efficiency. Institutions increasingly use futures contracts to leverage positions and arbitrage between spot ETFs and futures markets.
Hedge funds often hold short positions in futures to profit from price differences, while asset managers and pension funds maintain net long positions. ETFs provide greater liquidity and lower transaction costs compared with direct crypto holdings.
Systemic risk concerns grow as a few custodians, including Coinbase with 80% of crypto-assets, dominate the market. Volatility, liquidity gaps, and concentrated custody could transmit crypto shocks to the wider financial system, underscoring the need for regulatory oversight.
Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!
