Cryptocurrencies Archives | Digital Watch Observatory

Digital euro standards advance with European Central Bank support

The European Central Bank has signed agreements with the European Card Payment Cooperation, nexo standards, and the Berlin Group to support the future rollout of digital euro payments. Existing open technical standards will be reused to process transactions, to make implementation more accessible for payment service providers and merchants across Europe.

CPACE supports contactless payments, nexo standards help connect merchants with providers, while the Berlin Group supports account-based transactions using identifiers such as mobile numbers. Together, these standards are intended to create a more consistent technical environment for digital euro transactions across devices and platforms.

Reliance on open standards is designed to reduce costs and limit dependence on proprietary systems controlled by global card schemes and digital wallets. The ECB says this should help European payment providers expand beyond domestic markets without requiring major upgrades to point-of-sale infrastructure, while also improving interoperability and competition.

The final impact still depends on the adoption of the digital € regulation by the EU co-legislators, which the ECB says is necessary to unlock the initiative’s full potential and provide market actors with greater certainty for future investment.

Why does it matter?

Adoption of open standards by the European Central Bank reduces reliance on global payment providers and lowers costs for banks and merchants. Regulatory clarity on the digital euro would enable European solutions to scale across borders and strengthen control over the payments infrastructure.

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New Chinese rules restrict digital promotion of financial products

China has introduced new online marketing rules for financial products, further tightening its long-standing restrictions on cryptocurrency-related activity. The new framework limits the promotion of financial products to licensed entities and treats digital currency trading and issuance as illegal financial activity.

Issued by the People’s Bank of China and seven other regulators, the Administrative Measures for Online Marketing of Financial Products will take effect on 30 September 2026. The rules extend responsibility to platforms, intermediaries, and content creators who promote or facilitate financial products online.

Any assistance in promoting or facilitating prohibited financial activity may now be treated as participation in illegal finance, expanding enforcement beyond direct trading bans. In practice, that broadens the focus from financial products themselves to the wider digital promotion layer, including online displays, traffic generation, and other forms of internet-based marketing support.

Authorities say the measures are intended to protect consumers by limiting misleading or aggressive online promotion, including livestream marketing and viral investment content. In that sense, the rules are not only about crypto, but about tighter control over how financial products are marketed in digital environments.

The policy also reinforces China’s existing position, dating back to 2021, when regulators declared all cryptocurrency transactions illegal, while pushing enforcement deeper into the digital advertising and distribution layers of financial markets.

Why does it matter?

Stronger oversight of online financial promotion shows that crypto-related advertising is increasingly being treated as a regulatory risk category, not just a marketing issue. The Chinese move also points to a broader trend in which regulators are extending scrutiny beyond financial products themselves to the digital channels, influencers, and platforms that help distribute them.

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New whitepaper aims to streamline virtual asset oversight in Nigeria

A Pan-African industry body, the Virtual Asset Service Providers Association, has introduced Project Green-White-Green, a policy framework designed to bring virtual asset transactions more fully into Nigeria’s formal financial system.

The proposal targets regulatory inefficiencies while seeking to capture an estimated $92.1 billion in annual transaction activity currently operating with limited formal integration.

VASPA Executive Chair Franklin Peters, who also leads Boundlesspay, said the framework addresses overlapping mandates among the Securities and Exchange Commission, Central Bank of Nigeria, and Corporate Affairs Commission. The model proposes more coordinated supervision, alignment of foreign exchange standards, and identity verification through integration with the National Identity Management Commission.

The whitepaper also introduces an API-based system intended to automate VAT and capital gains tax collection at the point of transaction. The aim is to reduce administrative friction, improve compliance, and create clearer regulatory pathways for Web3 businesses operating in Nigeria.

Although designed for Nigeria, the framework is presented as scalable across other African markets. Its proponents argue that better regulatory coordination and more structured taxation could support wider economic goals, including stronger formalisation and improved public revenue collection.

Why does it matter?

The framework directly tackles regulatory fragmentation that has slowed crypto and Web3 development in Nigeria.

By aligning the roles of the Securities and Exchange Commission of Nigeria, the Central Bank of Nigeria, and the Corporate Affairs Commission of Nigeria, it aims to reduce legal uncertainty and create a clearer path for startups to operate formally.

It also introduces structured taxation and compliance mechanisms, which could improve state revenue collection while bringing virtual asset activity into the formal economy.

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UK’s FCA steps up enforcement on crypto

The UK’s Financial Conduct Authority has led its first coordinated crackdown on illegal crypto trading, targeting firms operating without authorisation. The action forms part of wider efforts to enforce compliance in the sector.

According to the Authority, the operation involved identifying and taking action against companies that unlawfully promoted or offered crypto services. The move aims to protect consumers from potential risks.

The regulator stated that illegal crypto promotions can expose users to financial harm and undermine market trust. It emphasised the importance of ensuring firms meet regulatory requirements before operating.

The Authority said the crackdown reflects a stronger enforcement approach to unauthorised crypto activity, with further action expected to support market integrity in the UK.

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Crypto derivatives rules face overhaul in Thailand consultation

Thailand is moving to simplify access to crypto derivatives markets through proposed regulatory changes aimed at reducing operational barriers for digital asset firms. The Securities and Exchange Commission of Thailand has opened a consultation on letting licensed crypto firms access derivatives without separate corporate entities.

Current regulations require firms to operate distinct legal structures for derivatives activity, increasing compliance costs and limiting market expansion. The proposed framework consolidates licensing under a single regulatory umbrella while maintaining oversight through internal controls and conflict management rules.

The reform reflects a broader international shift towards integrating crypto and traditional financial markets within unified trading environments. Similar momentum is visible in the United States, where discussions on crypto perpetual futures are advancing alongside increased institutional activity in derivatives infrastructure.

Market activity is already responding to anticipated changes, including acquisitions of regulated trading platforms to support expanded product offerings. These developments indicate growing alignment between regulatory evolution and industry expansion in digital asset derivatives markets.

Why does it matter?

These changes represent a broader move toward integrating crypto and traditional markets under unified regulatory frameworks. Reducing structural barriers may improve efficiency and innovation while preserving oversight.

Parallel developments across key jurisdictions also point to growing global competition to set standards for crypto derivatives, with implications for liquidity, access, and institutional participation worldwide.

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Singapore proposes more tailored capital rules for crypto assets

Singapore’s central bank has launched a consultation on new capital rules for crypto-asset exposures, proposing a more differentiated approach than treating all blockchain-based assets as equally risky.

Under the draft framework, tokenised traditional assets and certain stablecoins would fall into a lower-risk category with lighter capital treatment. The proposal also leaves room for some assets on permissionless blockchains to qualify for that category if they meet principle-based risk conditions.

At the same time, the approach remains cautious. Singapore-incorporated banks would face strict exposure limits, including a cap of 2% of Tier 1 capital for qualifying crypto-asset exposures and a 5% Tier 1 capital limit for exposures that give rise to liabilities.

The consultation suggests Singapore is not trying to open the door widely to bank crypto activity, but rather to create a more workable prudential framework for selected forms of tokenised finance. That would allow regulators to distinguish between higher-risk crypto exposures and assets that more closely resemble traditional financial instruments in tokenised form.

The move is significant because it points to a more tailored interpretation of international prudential standards rather than a one-size-fits-all approach. If adopted, it could reduce uncertainty for banks seeking to engage with tokenised assets while preserving tight capital safeguards around the sector.

More broadly, the proposal reflects a cautious effort to integrate parts of the crypto and tokenisation market into mainstream finance without weakening the core logic of bank capital regulation. In that sense, the consultation is less a loosening of rules than an attempt to apply them with greater precision.

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Global stablecoin rule gaps raise concerns in Bank for International Settlements warning

The Bank for International Settlements has warned that diverging national approaches to stablecoin regulation could create openings for regulatory arbitrage as stablecoins become more closely linked to the traditional financial system.

In a recent bulletin, the BIS says the growth of stablecoins is creating policy challenges ranging from anti-money laundering and financial integrity to broader risks to financial stability. It argues that inconsistent regulatory treatment across jurisdictions could allow firms to exploit gaps between rulebooks, making supervision less effective and fragmenting cross-border financial activity.

The BIS also points to broader systemic concerns as stablecoins move closer to mainstream finance. Their expanding role could reshape how funds move through the financial system, with implications for bank funding, credit intermediation, and the transmission of stress during market volatility. Separate BIS research has also found that stablecoins are playing a growing role in safe asset markets, with implications for financial stability and monetary policy transmission.

One key concern is how stablecoin structures could behave under pressure. If large numbers of users redeem at once, issuers may need to liquidate reserve assets quickly, potentially transmitting stress into underlying markets.

The BIS bulletin frames these risks as part of a broader challenge: stablecoins are no longer crypto instruments operating in isolation, but are increasingly linked to core parts of the financial system.

The BIS also warns that regulation is made harder by the fact that many stablecoins circulate on public blockchains. In that environment, conventional controls such as anti-money laundering checks and identity verification are often weakest at the points where users move between crypto markets and traditional finance.

That is why the bulletin stresses the importance of stronger controls at entry and exit points, rather than relying only on rules aimed at issuers themselves.

For some jurisdictions, the concerns go beyond prudential supervision. The BIS says the wider use of foreign-currency-denominated stablecoins could raise concerns about monetary sovereignty and weaken existing foreign exchange controls. That risk is especially relevant in countries where domestic monetary and exchange rate frameworks are more exposed to external pressures.

The broader significance of the warning is that the BIS is pushing for more coordinated and tailored regulation at a moment when stablecoins are moving closer to mainstream use.

Its message is not that all stablecoins should be regulated identically, but that fragmented oversight could undermine policy effectiveness, increase systemic vulnerabilities, and make cross-border risks harder to contain.

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ESMA signals end of MiCA transition period as EU crypto enforcement tightens

The EU’s crypto rulebook is moving into a more decisive enforcement stage, with the European Securities and Markets Authority (ESMA) issuing a fresh warning ahead of the end of transitional periods under the Markets in Crypto-Assets Regulation (MiCA).

ESMA says the transition will expire across the EU on 1 July 2026, after which firms providing crypto-asset services to EU clients without MiCA authorisation will be in breach of EU law and must stop offering such services.

Rather than announcing a new rule, ESMA’s statement clarifies what supervisors expect in the final stretch before the deadline. Unauthorised crypto-asset service providers must have credible and immediately executable wind-down plans in place, including arrangements for offboarding clients and transferring assets to an authorised provider or a self-hosted wallet. By 1 July 2026, those plans must already have been implemented.

ESMA also expects authorised providers to prepare for client migration from unauthorised platforms before the deadline, including through robust onboarding procedures and compliance with anti-money laundering and counter-terrorist financing requirements.

National competent authorities are expected to verify wind-down plans, take action against unauthorised providers, and scrutinise migration strategies to prevent firms from continuing business as usual after the transition ends.

The statement also sharpens the message to firms outside the EU. ESMA says third-country entities are not permitted to provide MiCA services to EU investors or solicit EU clients, except in the narrow case of reverse solicitation. It also warns against outsourcing or delegation arrangements that would allow unauthorised non-EU entities to continue serving EU clients indirectly.

For users, ESMA’s message is straightforward: protections under MiCA depend on dealing with an authorised EU entity, not simply a familiar brand name.

Investors are being urged to verify whether their provider appears in ESMA’s interim MiCA register and, where necessary, move assets to an authorised provider or a self-hosted wallet.

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New Zealand steps up crypto tax enforcement with stronger data scrutiny

New Zealand’s Inland Revenue has stepped up its push for crypto tax compliance, warning investors to review their obligations as authorities expand enforcement using transaction data and new reporting tools. Officials say they have identified around 355,000 users involved in roughly 57 million crypto transactions worth a combined NZ$36 billion.

Under current tax rules, crypto-assets are treated as property, meaning profits from selling, trading, or exchanging digital assets are generally considered taxable income. Those gains must be declared as part of annual income and taxed under standard income brackets.

Inland Revenue says stronger data access and analytics have significantly improved its ability to identify potential non-compliance. The planned adoption of the Crypto-Asset Reporting Framework will further widen that reach by enabling cross-border data sharing and helping authorities detect offshore crypto activity involving New Zealand residents.

Initial compliance action is already underway. Inland Revenue has begun sending letters to individuals flagged for crypto trading activity, urging them to review previous filings and submit an IR3 return where necessary, as officials compare declared income with transaction records.

The move reflects a broader shift in how governments are approaching digital assets. Rather than treating crypto as a loosely visible or marginal market, tax authorities are increasingly folding it into mainstream financial oversight, backed by stronger reporting standards and more detailed transaction-level scrutiny.

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Illegal cryptocurrency circulation to carry prison sentences in Russia

Russia’s government commission on legislative activity has approved new measures introducing criminal liability for large-scale cryptocurrency operations conducted without the central bank’s authorisation.

The proposal establishes penalties for the illegal organisation of digital currency circulation where significant damage or substantial financial gain is involved.

Under the approved amendments, individuals found to be organising crypto transactions in violation of Russian law could face prison sentences of 4 to 7 years. The rules apply to cases involving harm to individuals, organisations, or the state, or large-scale illicit income.

The draft introduces a new Article 171.7 into the Russian Criminal Code, formally defining ‘illegal organisation of digital currency circulation’ as a punishable offence. The measures are expected to come into force on 1 July 2027, marking a significant tightening of enforcement in the country’s digital asset sector.

By introducing custodial penalties, Russia is raising the legal and financial risks for unlicensed digital asset activity, which could deter informal market participation and push activity towards regulated channels.

In the broader context, it reflects a global trend in which governments are moving to formalise oversight of crypto markets in response to concerns about financial crime, capital flows, and systemic risk.

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