Cryptocurrencies Archives | Digital Watch Observatory

Deutsche Bank highlights shift towards digital forms of money

Deutsche Bank has highlighted a structural shift in the financial system towards digital, programmable, and always-on money. In a new white paper, the bank examines how real-time transaction infrastructure is reshaping payments and driving the adoption of new forms of digital currency.

The report identifies three core pillars of this transformation:

Stablecoins
Tokenised deposits
Central bank digital currencies (CBDCs)

Stablecoins have seen rapid growth in transaction volumes and are increasingly supported by formal regulatory frameworks in key jurisdictions, particularly for cross-border and business-to-business payments, the report describes.

Tokenised deposits are emerging as a competing model of programmable bank money, enabling 24/7 settlement within and between financial institutions. According to the report, adoption remains limited by interoperability challenges and the use of permissioned networks.

The report describes CBDCs as a public-sector approach to digital money innovation. China’s e-CNY system and the European Central Bank’s planned digital euro illustrate growing momentum, while Asian financial hubs continue to expand cross-border and institutional settlement pilots.

Why does it matter?

The shift outlined in the Deutsche Bank report signals a structural redesign of how money itself functions, moving from static, institution-bound systems to programmable, always-on digital infrastructure.

As stablecoins, tokenised deposits, and CBDCs develop in parallel, they collectively reshape how value is issued, transferred, and settled across borders, potentially reducing friction in global payments while increasing competition between public and private forms of money.

The evolution is not just about efficiency gains but about who controls monetary infrastructure, how regulatory frameworks adapt, and how financial sovereignty and interoperability are balanced in an increasingly tokenised global economy.

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Australia moves to tighten capital gains rules on crypto assets

Australia’s proposed capital gains tax reforms could affect crypto investment behaviour, according to industry participants. The ruling Labor Party has proposed changes, including a minimum 30% tax on capital gains and the removal of the 50% discount for assets held for more than 12 months.

Industry representatives said the changes may increase the tax burden for some crypto investors, particularly lower-income retail traders. Estimates suggest that smaller retail traders could see a substantial rise in liabilities under the new structure, reducing the appeal of ‘patient investing’ and long-term wealth-building strategies.

Some market participants said the policy shift could encourage more frequent trading in crypto markets. Industry participants also suggested that some investors may shift towards structured investment vehicles such as retirement funds.

The reforms still require approval from Australia’s Parliament and face political resistance. Critics said the measures could affect investment patterns and asset allocation decisions across financial markets.

Why does it matter?

The proposed tax changes remove incentives for long-term crypto holding and may shift investor behaviour towards shorter-term trading. By increasing tax burdens on gains held over time, the policy could reshape retail investment strategies and influence how capital flows within Australia’s digital asset market.

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CLARITY Act moves forward amid split over crypto market rules

The United States Senate Banking, Housing, and Urban Affairs Committee has advanced the Digital Asset Market Clarity Act in a 15–9 vote, marking another step towards establishing a federal framework for digital asset markets.

Committee Chair Tim Scott said the bill is intended to establish clearer rules for digital assets, strengthen consumer protection, support innovation and keep digital asset activity within the United States. The committee said the legislation now moves to the Senate floor.

The vote followed months of negotiations and highlighted continuing political divisions over the scope of US crypto regulation. Supporters argue that the bill would provide long-awaited market structure rules, while critics remain concerned about consumer protection, enforcement powers, conflicts of interest and the treatment of decentralised finance.

A central issue in the revised text is how to regulate stablecoin-related activity. The bill seeks to prevent stablecoins from functioning like bank deposits by limiting passive yield on customer holdings, while still allowing certain rewards linked to user activity or platform use.

The bill also continues debate over decentralised finance, including how far regulation should extend to developers, protocols and infrastructure providers that do not directly custody user funds.

Ethics provisions were among the most contested issues during the markup process, with lawmakers divided over whether and how to restrict potential conflicts of interest involving public officials and cryptoasset activities.

Further hurdles remain before the legislation can become law. The bill will need to advance through the full Senate, be reconciled with other Senate work on digital asset regulation and secure agreement with the House of Representatives before reaching the President’s desk.

Why does it matter?

The vote moves the United States closer to a federal framework for digital asset markets, but the debate shows that key questions remain unresolved. Rules on stablecoin rewards, DeFi, developers and enforcement powers will shape how crypto firms operate in the US. However, the political split could affect how quickly Congress can deliver a stable regulatory regime.

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Swiss town introduces blockchain voucher scheme to support conservation work

The Swiss municipality of Muri bei Bern has launched BIDI, a blockchain-based biodiversity voucher system designed to reward residents for local conservation work.

The project was developed with The Hashgraph Group, Swisscoast and Apps with Love, and runs on Hedera’s distributed ledger infrastructure. Project partners describe it as Switzerland’s first live municipal blockchain initiative.

Residents can receive digital vouchers for activities such as meadow restoration, invasive plant removal, wetland conservation and hedge maintenance. The vouchers are pegged to the Swiss franc and can be redeemed at participating local merchants and service providers.

The project replaces a paper-based voucher programme that had operated locally for several years. Swisscoast developed the payment layer using its HCHF digital Swiss franc infrastructure, while The Hashgraph Group supported the initiative through its Enterprise Accelerator Programme for government and enterprise blockchain applications.

Project partners present BIDI as an example of blockchain technology being used beyond financial markets, with a focus on public administration, environmental incentives and local economic participation. They also say the framework could be adapted for other municipalities in Switzerland and elsewhere in Europe.

Why does it matter?

The project shows how blockchain tools are being tested in local public services, not only in finance. By digitising biodiversity vouchers and linking them to local conservation work, Muri bei Bern is experimenting with a model that could make environmental incentives easier to issue, track and redeem. Its wider significance will depend on whether the system proves useful beyond a small municipal setting and whether similar projects can scale without adding unnecessary technical complexity.

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Bhutan’s Gelephu city launches fast-track crypto licensing for global firms

Bhutan’s Gelephu Mindfulness City has launched an accelerated pathway for crypto and fintech firms already regulated in major financial hubs such as Singapore, Hong Kong and Abu Dhabi.

The system is intended to reduce duplication in compliance checks while allowing eligible companies to incorporate in Gelephu, seek local regulatory approval, and open corporate bank accounts through a coordinated process involving DK Bank, the city’s official banking partner. Standard Know Your Customer and Anti-Money Laundering checks will still apply.

Officials said foreign licences will not replace local supervision, but will instead help streamline due diligence. The framework also differs from passporting models used in regions such as the European Union, as each firm must still meet Gelephu’s own regulatory requirements.

Gelephu Mindfulness City also rejected speculation linking recent Bitcoin transfers flagged by analytics platforms to reserve sales. Officials said Bitcoin held under the country’s ‘Bitcoin Development Pledge’ remains part of strategic reserves allocated for the long-term development of the city.

Why does it matter?

The move shows how smaller jurisdictions are competing for digital asset and fintech firms by offering faster market entry while trying to preserve regulatory credibility. By recognising existing licences without replacing local supervision, Gelephu is positioning itself as a controlled gateway for firms seeking access to a new crypto and fintech jurisdiction.

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Stablecoin rules updated in revised US Senate proposal

The US Senate Banking Committee has released a revised 309-page draft of the Digital Asset Market Clarity Act ahead of a markup vote, reopening debate on stablecoin rewards, DeFi protections and the regulation of digital asset markets.

The draft, proposed by Committee Chair Tim Scott, seeks to provide a federal framework for digital asset market structure, including provisions on securities innovation, illicit finance, decentralised finance, banking innovation, regulatory sandboxes, software developers and customer protection.

A key section addresses stablecoin rewards. The draft would prohibit digital asset service providers from paying interest or yield on payment stablecoin balances in a way that is economically or functionally equivalent to bank deposit interest. However, it would permit certain activity-based or transaction-based rewards and incentives, provided they are not equivalent to interest or yield on a bank deposit.

The text also includes provisions affecting decentralised finance. It covers rules on non-decentralised finance trading protocols, illicit finance obligations for distributed ledger messaging systems, temporary holds for certain digital asset transactions, voluntary cybersecurity programmes for DeFi trading protocols and studies on digital asset mixers, foreign intermediaries and financial stability risks.

Software developer protections are also included in the draft. The bill contains a dedicated title on protecting software developers and software innovation, including provisions on non-fungible tokens, self-custody and blockchain regulatory certainty.

The draft still faces further negotiation before any final vote. Lawmakers continue to debate the balance between consumer protection, illicit finance controls, innovation, stablecoin incentives and the treatment of decentralised finance. At the same time, the legislation needs to be aligned with other Senate work on digital asset market structure.

Why does it matter?

The revised Clarity Act is another step towards a federal framework for digital asset markets in the United States, with rules that could shape how crypto firms, stablecoin platforms and decentralised finance projects operate. Its provisions on stablecoin rewards, DeFi and software developers show lawmakers trying to balance innovation, consumer protection and oversight in one of the world’s most important financial markets.

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Dubai opens government payments to crypto users

Dubai residents will be able to pay government fees using virtual assets after Crypto.com’s UAE entity, Foris DAX Middle East FZE, received a Stored Value Facilities licence from the Central Bank of the UAE.

Crypto.com said the approval makes it the first Virtual Asset Service Provider in the UAE to receive the licence. It allows the company to activate its partnership with the Dubai Department of Finance, enabling virtual asset payments for government services.

Financial settlements will be conducted in UAE dirhams or Central Bank-approved dirham-backed stablecoins through the regulated Stored Value Facilities framework. Crypto.com said the arrangement supports the Dubai Cashless Strategy.

Users wishing to access the service will need to be onboarded through Crypto.com’s VARA-licensed platform. The company also said that, subject to further Central Bank approvals, the licence could support crypto payment integrations with Emirates and Dubai Duty Free.

Crypto.com executives described the approval as a step towards regulated digital asset adoption in the UAE, while linking it to the country’s wider push for compliant crypto infrastructure and digital payments innovation.

Why does it matter?

The development shows how Dubai is moving virtual asset payments closer to public-sector infrastructure, rather than treating them only as investment products or private-sector payment experiments. By routing payments through a regulated Stored Value Facilities framework and settling them in dirhams or approved dirham-backed stablecoins, the model links crypto access with conventional payment oversight, financial regulation and the emirate’s cashless economy strategy.

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Chainalysis points to rising adoption of blockchain forecasting

Crypto prediction markets are expanding rapidly as blockchain technology reshapes how users speculate on and hedge against real-world events, according to blockchain analytics firm Chainalysis.

Platforms that allow traders to take positions on elections, interest rates, sports and geopolitical developments have attracted both retail users and institutional firms, pushing the sector towards a more mature financial structure. Chainalysis says activity has grown sharply since late 2024, with inflows reflecting both retail participation and deposits from market makers.

The firm says major financial and crypto companies are increasingly building infrastructure around event-based contracts. It points to the involvement of major financial institutions and crypto platforms such as Robinhood, Coinbase and Crypto.com, which are exploring or launching prediction market offerings.

Chainalysis argues that blockchain transparency could help prediction markets address compliance and market-integrity risks by recording transactions on public ledgers. The firm says that visibility can support investigations into money laundering, sanctions exposure, wash trading, insider trading and market manipulation.

Regulatory uncertainty nevertheless remains a major obstacle. In the United States, regulators and state authorities continue to debate whether some prediction markets should be treated as financial derivatives or gambling products. Chainalysis also notes that several jurisdictions in Europe, Asia-Pacific and Latin America have restricted or blocked major prediction market platforms.

The firm argues that stronger blockchain-based monitoring tools could help regulators and compliance teams support responsible innovation while reducing financial crime and market abuse risks.

Why does it matter?

The growth of crypto prediction markets points to a wider convergence between digital finance, public forecasting and event-based speculation. Institutional interest suggests the sector is moving beyond retail betting, but unresolved questions over gambling law, derivatives regulation, market manipulation and the use of non-public information will shape whether these platforms become a recognised part of financial markets or remain legally fragmented.

Chainalysis also raises a broader governance question: whether public-ledger transparency can make crypto-native markets easier to monitor than traditional betting or derivatives systems, or whether global accessibility and fragmented oversight will create new risks for regulators.

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European Central Bank moves forward with digital euro technical work

The European Central Bank is advancing technical work on the digital euro, a proposed electronic form of central bank money designed to complement cash in an increasingly digital payments landscape.

The project reflects Europe’s response to the rapid shift towards digital payments, where cards, apps and mobile wallets are increasingly used for everyday transactions. The ECB says a digital euro would provide a European payment option that could be used across the euro area, both online and offline.

Users would be able to store digital euro holdings in an account set up with a bank or public intermediary and use them for in-store, online and person-to-person payments. The ECB says the system would aim to combine the convenience of digital payments with features associated with cash, including offline functionality.

Policy objectives include strengthening Europe’s strategic autonomy in payments, supporting monetary sovereignty and ensuring access to public money in digital form. The ECB has also presented privacy as a central design feature, saying offline digital euro payments would offer cash-like privacy, with transaction details known only to the payer and the recipient.

The project remains conditional on the EU legislative process. The ECB aims to be technically ready for a potential first issuance of the digital euro in 2029, assuming the necessary EU legislation is adopted in 2026.

Supporters view the digital euro as a way to preserve the role of central bank money in digital payments and reduce reliance on non-European payment providers. Debate continues over how to balance innovation, privacy, financial inclusion, bank intermediation and public trust.

Why does it matter?

The digital euro would shape how public money functions in a digital economy increasingly dominated by private payment platforms and international card schemes. Its significance lies not only in creating a new payment tool, but in preserving access to central bank money, supporting European payment sovereignty and setting privacy expectations for public digital infrastructure.

Its success will depend on whether the final design can offer clear benefits over existing payment options while maintaining trust, usability and strong safeguards. The project also raises broader questions about how central banks remain relevant in everyday payments without crowding out private-sector innovation or weakening the role of commercial banks.

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Italy central bank backs review of tokenised SEPA payments

European policymakers are increasingly examining how traditional payment systems could evolve in response to the rise of digital assets. Bank of Italy Deputy Governor Chiara Scotti has suggested that the Single Euro Payments Area (SEPA) could be extended to tokenised payments to support Europe’s digital finance infrastructure.

Scotti described a tokenised SEPA framework as an important area for consideration, highlighting that Europe’s existing payments system already offers strong interoperability and shared standards.

Her remarks align with broader efforts by the European Central Bank to integrate distributed ledger technology into settlement systems.

The European Central Bank is currently developing initiatives such as Pontes, a pilot linking blockchain-based market platforms with central bank settlement infrastructure, alongside a longer-term roadmap known as Appia.

These projects aim to ensure euro-denominated settlement remains central as tokenised deposits and digital assets expand.

Policymakers warn that widespread stablecoin adoption could shift deposits away from banks, weakening financial stability and reducing the euro’s influence in digital markets. As a result, central bank money is being considered as a key anchor for future tokenised financial systems.

Why does it matter?

The debate reflects Europe’s effort to maintain control over its monetary system as payments move toward tokenised and blockchain-based infrastructure. Without central bank money integrated into these systems, risks include weaker financial stability, fragmented payment networks, and greater reliance on external stablecoin ecosystems, potentially reducing the euro’s role in digital finance.

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