Cryptocurrencies

New UK regime targets systemic stablecoin issuers

The Bank of England and the Financial Conduct Authority have set out how they will jointly regulate stablecoin issuers whose activities could pose risks to UK financial stability.

The joint approach forms part of the UK’s emerging stablecoin regime. Under the planned framework, the FCA will regulate UK-issued qualifying stablecoins, while issuers recognised as systemic by HM Treasury will also be subject to Bank of England oversight.

The authorities said the two-part regime is intended to provide clarity for firms while supporting innovation, consumer protection, market integrity and financial stability.

Stablecoin issuers may become systemic if their coins are widely used in payments and could create risks for the UK financial system. In those cases, the Bank would supervise prudential and financial-stability risks, while the FCA would continue to oversee consumer protection, competition and market integrity issues.

The framework includes transition arrangements for firms moving from FCA-only supervision to joint regulation. The Bank and FCA said this should help issuers scale without facing conflicting or duplicative requirements.

The approach also allows for issuers to be recognised as ‘systemic at launch’ where they are not yet operating at systemic scale but are likely to do so. Such firms could enter a phased supervisory pathway while meeting both FCA and Bank requirements.

The Bank is separately consulting on draft rules for sterling-denominated systemic stablecoin issuers. It intends to finalise its Code of Practice by the end of 2026, with regulated stablecoins expected to operate in the UK from 2027.

Why does it matter?

The UK framework is important because it creates a pathway for stablecoins to move from crypto-market products towards regulated payment instruments. By scaling supervision as issuers grow, the UK aims to support innovation without allowing systemically important stablecoins to develop outside financial stability oversight. The model could influence how other jurisdictions regulate digital money, especially where stablecoins are expected to support retail payments, wholesale settlement or cross-border transactions.

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AUSTRAC warns AI is reshaping financial crime

AUSTRAC has released a new suite of intelligence and risk assessments examining evolving threats, related to money laundering, terrorism financing and proliferation financing.

The Australian financial intelligence agency said advances in AI and other emerging technologies are enabling criminals to exploit vulnerabilities and evade detection. The reports are intended to help organisations strengthen risk-based anti-money laundering and counter-terrorism financing controls.

The package includes the Money laundering update 2026, Terrorism Financing Update 2026, Proliferation Financing Update 2026 and a report on terrorism financing risks in Australia’s non-profit sector. AUSTRAC said the publications show growing reliance on everyday financial services and corporate structures to conceal illicit funds.

While traditional risk channels remain relevant, AUSTRAC said financial crime is becoming more complex and interconnected as technology, globalisation and increasingly sophisticated criminal methods reshape how illicit activity is concealed.

AUSTRAC identified AI and virtual assets, including cryptocurrency, as key technologies reshaping the threat landscape by increasing both the scale and sophistication of financial crime.

The agency said legitimate financial services, trade flows, corporate structures and routine transactions can all be exploited to disguise illicit activity. It also highlighted persistent vulnerabilities in Australia’s non-profit sector, noting that although the overall terrorism financing risk remains stable, charities and not-for-profit organisations continue to face exposure to money laundering and terrorism financing.

Charities and not-for-profit organisations play an important role in supporting communities in Australia and overseas. However, AUSTRAC said they remain vulnerable to money laundering and terrorism financing.

AUSTRAC said the intelligence products are designed to help regulated organisations better understand emerging financial crime threats and strengthen their anti-money laundering and counter-terrorism financing controls.

Why does it matter?

Financial crime is becoming increasingly difficult to detect as criminal networks exploit legitimate financial systems alongside AI, cryptocurrencies and other emerging technologies. AUSTRAC’s latest assessments highlight the need for regulated organisations to strengthen risk-based anti-money laundering and counter-terrorism financing controls in response to a more complex threat environment.

The reports also underscore a broader shift in financial crime prevention. Rather than focusing only on traditionally high-risk transactions, organisations are being encouraged to monitor how ordinary financial services, corporate structures and cross-border activities can be misused, reflecting the growing sophistication of modern illicit finance.

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Central Bank of Azerbaijan submits draft crypto law for review

Azerbaijan has moved closer to regulating its cryptocurrency sector after the Central Bank completed a draft law on virtual assets and crypto markets and submitted it to state authorities for review.

Fidan Tofidi, Director of the Central Bank’s Financial Technologies and Innovations Department, said the legislation could be adopted before the end of the year. She described the framework as a major step for a sector that has so far remained unregulated in the country.

The proposed regime is expected to introduce licensing and supervision for virtual asset service providers operating in Azerbaijan. Regulators have previously said the framework should cover virtual asset markets and the activities of companies providing crypto-related services.

The initiative is part of Azerbaijan’s broader financial-sector development agenda, which includes work on virtual assets, shared know-your-customer mechanisms, supervisory technology and digital financial infrastructure.

Earlier Central Bank discussions on virtual assets focused on regulatory and supervisory approaches, market risks and opportunities, and the experience of countries such as Kazakhstan and Türkiye.

Azerbaijan has also tested crypto-related projects through its regulatory sandbox. One pilot involved a platform for buying, selling, exchanging and storing virtual assets, although the project was suspended after failing to achieve expected test results.

The Central Bank has maintained a cautious stance on a possible central bank digital currency, saying it is monitoring international developments before moving forward.

Why does it matter?

Azerbaijan’s draft law signals a shift from a legal grey area towards formal oversight of crypto markets and virtual asset service providers. Licensing and supervision could give regulators more visibility over market activity, strengthen consumer protection and help address money-laundering and terrorism-financing risks. The move also reflects a wider trend among emerging markets: rather than banning crypto outright, authorities are building frameworks to integrate digital assets into regulated financial systems.

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US SEC reviews framework for crypto and other novel ETFs

The US Securities and Exchange Commission has opened a public consultation on how it should treat exchange-traded funds that invest in innovative asset classes or use novel investment strategies.

The request for comment focuses on so-called Novel ETFs and asks whether existing regulatory tools remain appropriate as the ETF market expands beyond traditional products.

The SEC said examples of Novel ETFs include funds linked to crypto assets, commodity-focused instruments, single-stock strategies, heightened leverage, blockchain-enabled opportunities, private assets and event contracts.

The consultation asks whether such products raise questions about investment company status, ETF listing standards, investor protection, market surveillance, arbitrage mechanisms and registration procedures.

The review comes after rapid growth in the ETF market. The SEC said total ETF net assets increased from more than $4 trillion at the end of 2019 to more than $12 trillion at the end of 2025, while the number of ETFs rose from almost 1,900 to more than 4,600.

The regulator is seeking feedback from funds, advisers, investors and other market participants on whether further action is needed to support innovation while protecting investors and maintaining fair, orderly and efficient markets.

Why does it matter?

The SEC consultation shows how regulators are reassessing ETF rules as products move into more complex and politically sensitive areas, including crypto assets and event-based instruments. Clearer rules could help issuers understand when a product can use existing ETF registration and listing pathways. At the same time, the review reflects concern that faster product launches should not weaken investor protection, market surveillance or the functioning of ETF arbitrage mechanisms.

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Australia’s ASIC extends digital asset licensing relief

Australia’s financial regulator, the Australian Securities and Investments Commission (ASIC), has extended its sector-wide no-action position for digital asset businesses until 30 September 2026, giving firms more time to apply for or vary an Australian Financial Services (AFS) licence. The extension is designed to support a smoother transition into the country’s evolving regulatory framework for digital assets.

The updated position also broadens the scope of relief to cover businesses operating under authorised representative arrangements or intermediary authorisations linked to AFS licence holders. ASIC said the changes are intended to provide greater regulatory certainty while maintaining investor protection and market integrity during the transition.

The extended timeline also applies to applications for Australian Market Licences and Clearing and Settlement facility licences. Firms must notify ASIC of their intention to apply and participate in a pre-application meeting before submitting an application.

ASIC said it has received around 30 licence applications since updating its guidance on digital assets and financial products in October 2025. According to the regulator, extending the no-action position gives firms additional time to adapt to Australia’s evolving Digital Asset Framework and clarified legal requirements.

Why does it matter?

The extension provides digital asset businesses with additional time to adapt to Australia’s evolving regulatory framework without disrupting existing operations. By pairing temporary regulatory flexibility with a clear licensing pathway, ASIC is seeking to encourage compliance while maintaining investor protection and market integrity.

The move also reflects a broader international trend in digital asset regulation. Rather than imposing immediate, sweeping requirements, regulators are increasingly using phased implementation and transitional relief to bring crypto businesses into established financial regulatory frameworks while reducing uncertainty for market participants.

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European Banking Authority proposes framework for MiCA enforcement fines

The European Banking Authority (EBA) has launched a consultation on a draft methodology for calculating fines under the Markets in Crypto-Assets Regulation (MiCA), aiming to ensure penalties are applied consistently, proportionately and transparently.

Under MiCA, the EBA supervises issuers of significant asset-referenced tokens (ARTs) and e-money tokens (EMTs). The proposed methodology explains how fines would be calculated when issuers or members of their management bodies are found to have intentionally or negligently breached regulatory requirements.

According to the EBA, the methodology is intended to improve transparency and consistency in enforcement while helping market participants better understand how supervisory penalties are determined in practice.

The public consultation will remain open until 28 September 2026, with a virtual public hearing scheduled for 16 July. The EBA said all feedback will be published after the consultation as part of its continued implementation of the MiCA framework.

Why does it matter?

The consultation strengthens the enforcement framework underpinning MiCA by claryfing how financial penalties will be calculated for significant crypto-asset issuers. Greater transparency and consistency can improve legal certainty for firms while reinforcing confidence that supervisory actions will be applied fairly across the EU.

The proposal also reflects the continued integration of crypto-assets into mainstream financial regulation. As MiCA moves from rulemaking to supervision and enforcement, detailed methodologies such as this one demonstrate how EU authorities are building a more mature and predictable regulatory environment for digital assets.

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US community lenders oppose stablecoin provisions in crypto bill

US community banks are campaigning against digital asset legislation, arguing it could encourage customers to move deposits from local lenders into stablecoins.

The Independent Community Bankers of America, which represents about 4,000 community banks, has launched an advertising campaign targeting provisions in the Digital Asset Market Clarity Act. The group argues that the bill could allow crypto firms and intermediaries to offer rewards or incentives linked to stablecoin use.

ICBA says such incentives could accelerate deposit outflows from community banks, reducing their ability to lend to small businesses, farmers and local communities. Based on its analysis of industry research, the group estimates that stablecoin-related deposit shifts could reduce community bank deposits by $1.3 trillion and cut lending by $850 billion.

Community banks argue that they play a central role in local credit creation, including agricultural and small-business lending. Bank executives warn that if deposits move into stablecoins, lenders may need to rely on more expensive funding sources, raising borrowing costs and limiting access to credit.

Crypto industry supporters reject the criticism, arguing that the legislation would provide clearer federal rules for digital assets and expand consumer choice. They say banking opposition reflects concern over competition, while banking groups argue they are seeking equivalent regulatory standards rather than protection from innovation.

The dispute highlights a growing policy tension over stablecoins, deposit competition and the role of banks in local economies as US lawmakers consider broader digital asset legislation.

Why does it matter?

The debate shows that stablecoin regulation is not only about crypto market oversight or consumer protection. It also raises questions about the structure of credit creation in the US economy. If stablecoins become attractive alternatives to bank deposits, local lenders argue they could lose funding used for small-business, agricultural and community lending. Crypto supporters see the same issue as an opportunity for competition and innovation. The outcome could shape how digital assets interact with traditional banking, especially outside major financial centres.

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Russia expects delay in crypto market regulation bill

Russia’s Ministry of Finance expects a short delay in the adoption of a draft law that would create a legal framework for the country’s cryptocurrency market.

Alexey Yakovlev, director of the ministry’s financial policy department, told Interfax that the bill is largely ready, but is unlikely to be adopted by the initial 1 July 2026 target. He said the draft is expected to move to committee review before its second reading in the State Duma.

The bill, titled ‘On Digital Currency and Digital Rights’, was approved by the State Duma in its first reading on 21 April. It would allow citizens and companies to legally buy cryptocurrency through licensed intermediaries, including exchange operators listed by the Bank of Russia, brokers and trust managers.

Domestic payments in cryptocurrency would remain banned, keeping the rouble as the country’s only legal means of payment for goods and services.

The Bank of Russia had previously expected the law to enter into force on 1 July. The regulator planned to adopt implementing rules in the third quarter of 2026 so that the first legal cryptocurrency transactions could begin in the fourth quarter.

The delay comes as Russian regulators continue to shape a tightly controlled crypto framework. Separate reporting suggests authorities are also considering restrictions on cryptocurrency advertising, including limits on naming specific digital currencies in promotional materials.

The emerging model points to limited legal access to crypto through licensed intermediaries, while preserving strict state control over payments, advertising and market infrastructure.

Why does it matter?

Russia’s approach shows a shift from legal uncertainty towards controlled integration of digital assets. Rather than fully opening the crypto market or banning it outright, regulators are building a licensed system that allows investment and some regulated transactions while keeping domestic payments prohibited. The model reflects broader concerns over financial stability, consumer protection, capital flows and state oversight, especially in a sanctions-constrained economy.

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South Korea pushes Travel Rule expansion for crypto

South Korea’s Financial Intelligence Unit has called for wider application of the crypto Travel Rule during Financial Action Task Force discussions in Paris, urging stronger anti-money laundering controls for virtual asset transfers.

The FIU proposed expanding Travel Rule requirements to cover transfers below the current 1 million won threshold. South Korea already applies the rule to crypto transfers above that amount, requiring virtual asset service providers to share information about senders and recipients.

The FIU said lower-value transfers can be used to avoid reporting requirements by splitting larger transactions into smaller payments. It also warned that offshore and unregistered virtual asset service providers create regulatory gaps and opportunities for illicit finance.

South Korea and several other FATF members also recommended applying Travel Rule obligations to both sending and receiving virtual asset service providers. The proposal is intended to improve traceability across cross-border crypto transactions and reduce regulatory arbitrage.

The discussions came as FATF members reviewed global implementation of anti-money laundering standards for virtual assets. FATF said implementation remains a priority and approved further work on virtual assets and decentralised finance risks, with related reports expected to be published in July.

Why does it matter?

South Korea’s proposal shows how crypto AML policy is moving from basic exchange registration towards tighter monitoring of cross-border transfers and offshore platforms. If FATF standards evolve in this direction, crypto service providers could face broader data-sharing duties even for smaller transactions. The debate also matters for privacy and compliance costs, as stronger traceability requirements may increase oversight but also add friction to routine digital asset transfers.

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Digital euro proposal advances in European Parliament committee

Members of the European Parliament’s Economic and Monetary Affairs Committee have adopted their position on legislation to establish a digital euro, moving the EU closer to negotiations on a possible central bank digital currency.

The proposal would create a new electronic form of central bank money issued by the European Central Bank. It is intended to give citizens and businesses a secure digital payment option while reducing reliance on non-EU payment providers.

MEPs backed a model that would allow the digital euro to work both online and offline. Online payments would be processed through an account-based system, while offline payments would use local storage devices and operate similarly to cash.

The committee said privacy-by-design and privacy-by-default principles should be built into the system. Technologies such as zero-knowledge proofs would allow transactions to be verified without exposing personal data, and the ECB would not have access to users’ personal identification data.

Payment service providers, including banks, e-money providers, post offices and regulated crypto-asset providers, would be able to distribute the digital euro across the EU. Most businesses would be required to accept the digital euro, with exceptions for self-employed people and small and micro enterprises that do not accept other digital payments.

Basic digital euro services would be free. These include opening an account, holding and managing funds, and obtaining at least one payment instrument. Offline payments would also be fee-free.

To protect financial stability, individuals would face limits on the number of digital euros they can hold. Businesses would not be allowed to hold digital euros except to accumulate incoming payments for up to 24 hours, and the digital euro would not pay or charge interest.

The negotiating mandates for the digital euro files will be announced at the start of the July plenary session. Final legislation will still need to be negotiated with the Council before entering into force.

Why does it matter?

The ECON vote shows that the EU is still pursuing a sovereign digital payment infrastructure while trying to address concerns over privacy, financial stability and the future of cash. The proposal contrasts with growing resistance to CBDCs in the United States and other jurisdictions. Still, Parliament’s approach also shows caution: the digital euro would need holding limits, pilot testing, a long rollout period and strict separation from the ECB’s monetary policy functions.

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