Economic

UK firms sign Cyber Resilience Pledge amid rising AI threats

The UK government has launched a voluntary Cyber Resilience Pledge, with more than 60 businesses and strategic government suppliers committing to strengthening their cyber defences.

Founding signatories include companies from retail, finance, media, technology and utilities, including M&S, Nationwide, ITV, Microsoft UK, Cloudflare, Deloitte, Accenture UK, Vodafone Group and VodafoneThree.

The pledge asks organisations to take three practical steps: make cybersecurity a board-level responsibility, register for the National Cyber Security Centre’s Early Warning service and take a risk-based approach to requiring Cyber Essentials certification across supply chains.

The government said the pledge is designed mainly for medium and large organisations, but is open to organisations of all sizes and sectors.

Signatories will be asked to publish a signed pledge letter and provide an annual update on progress.

The launch comes ahead of the government’s National Cyber Action Plan, which is expected to set out further cooperation with industry on cyber resilience in the AI era.

According to the government, cyberattacks cost UK organisations an estimated £14.7 billion a year, while the NCSC handled 204 nationally significant incidents in the year to September, up from 89 the previous year.

Officials also warned that AI is lowering barriers for attackers by helping them find software weaknesses, write exploit code and scale attacks more quickly.

Why does it matter?

The pledge elevates cyber resilience to board-level corporate governance, rather than treating it solely as an IT function. Its supply-chain focus is also important because major cyber incidents often spread through vendors, service providers and connected business partners. By linking the pledge to AI-enabled threats, the UK government is signalling that basic cyber hygiene, governance and supply-chain assurance remain essential even as attacks become faster and more automated.

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Japan to establish AI council to drive national AI adoption

Japan’s government has approved plans to establish a new council to accelerate AI adoption and review the legal frameworks governing its development and use. The initiative forms part of the country’s 2026 policy guidelines and reflects growing efforts to integrate AI into key sectors of the economy.

The new body will replace a digital administrative and fiscal reform council established under former Prime Minister Fumio Kishida. Authorities said it will lead to what they describe as an ‘AI transformation’, a broad effort to reshape public services, business processes and working practices through AI.

Japan sees AI as an important tool for addressing the challenges of an ageing population and a shrinking workforce. Priority areas include healthcare, elderly care, transportation, infrastructure, workplace productivity and public administration, alongside broader digitalisation measures such as expanding the use of electronic medical records.

Chief Cabinet Secretary Minoru Kihara said AI and digital technologies should reduce burdens on citizens and businesses while improving public services. The government said it intends to accelerate digital transformation as part of its broader programme of economic and administrative reform.

Why does it matter? 

Japan’s decision reflects how governments are increasingly embedding AI into long-term economic and public-sector strategies rather than treating it as a standalone technology initiative. For countries facing ageing populations and labour shortages, AI is becoming a key policy tool for sustaining productivity, modernising public services and addressing workforce constraints.

The new council also illustrates the growing convergence of AI policy and regulatory reform. By reviewing legal frameworks alongside promoting adoption, Japan is seeking to ensure that governance evolves in step with technological deployment, balancing innovation with public trust and accountability.

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OpenAI rolls out GPT-5.5 Instant Mini in ChatGPT

OpenAI has started rolling out GPT-5.5 Instant Mini in ChatGPT as the fallback model users reach after hitting GPT-5.5 Instant or Auto rate limits.

The model replaces GPT-5.3 Instant Mini in that fallback role.

Because GPT-5.5 Instant Mini is used only as a fallback model, it will not appear in the model picker.

OpenAI said the update does not affect the API or Codex.

According to the company’s release notes, GPT-5.5 Instant Mini performs better than GPT-5.3 Instant Mini at tracking evolving user intent, calibrating tone and avoiding repetitive or overly structured responses.

OpenAI also said testing showed stronger personalisation and fewer factual issues than the previous fallback model.

Why does it matter?

Fallback models shape the experience users receive when they hit rate limits, especially on high-demand ChatGPT plans. Improving that fallback path can make the transition less disruptive by preserving tone, context and reliability more effectively. The update also shows OpenAI refining its everyday model-routing infrastructure, not just the flagship models available in the picker.

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Germany reviews crypto tax rules in 2027 budget plan

Germany’s federal government has listed a possible adjustment to cryptocurrency taxation among consolidation measures for its 2027 budget framework.

The Federal Ministry of Finance said the 2027 budget plan and financial framework to 2030 require further measures to address remaining fiscal pressures.

The measures listed by the ministry include efficiency reforms, changes to social spending, new levies on plastic and sugar, adjustments to alcohol and tobacco taxes, and stronger action against financial and tax crime.

The same list also refers to an adjustment of cryptocurrency taxation, without specifying the exact reform under consideration.

Germany currently applies favourable tax treatment to private crypto holdings in many cases. Profits from private disposals can be taxable if crypto assets are sold within one year, whereas gains from longer-term holdings are generally treated more favourably under existing rules.

Any change could therefore draw attention from investors and the crypto industry, particularly if it affects long-term holding exemptions.

The proposal remains at the budget-planning stage. The government said the relevant ministries must make agreed consolidation measures ready for inclusion in draft legislation before the 2027 federal budget is finalised.

Why does it matter?

Germany’s reference to crypto taxation in the 2027 budget framework signals that digital assets are becoming part of mainstream fiscal policy, not only financial regulation. A change to the country’s favourable tax treatment for private crypto holdings could affect investors, platforms and Germany’s position in Europe’s digital asset market. However, the policy impact cannot be assessed fully until the government specifies which tax rules it wants to change.

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UK FCA review warns agentic AI could reshape retail finance

A new FCA-commissioned review has warned that agentic AI could reshape retail financial services by allowing consumers to delegate more financial decisions to autonomous tools.

The Mills Review examines how AI could transform retail finance by 2030 and beyond, including banking, payments, savings, investments, insurance and debt advice.

The review says AI is moving financial services from human-led and episodic activity towards services that are AI-enabled, continuous and delegated.

Over time, AI agents could help consumers manage finances, compare products, execute tasks and optimise financial choices within agreed limits.

The report says the shift could help address long-standing market problems, including advice gaps, low switching, financial exclusion and poor savings outcomes.

It also warns that greater autonomy will create new risks around consent, accountability, redress, market power, cyber threats and financial crime.

The review recommends that the FCA consider developing trusted frameworks for AI agent participation in financial services, including clearer expectations for identity, consent, control and liability.

It also calls for stronger AI-enabled supervision so the FCA can detect risks across firms, shared models, cloud platforms and data sources more quickly.

The report says human accountability must remain central, with firms remaining responsible for outcomes produced by AI systems.

Why does it matter?

The review points to a shift from AI as a financial services support tool to AI as an active participant in consumer finance. If agents begin comparing products, moving money, managing portfolios or taking out insurance within delegated limits, regulators will need clearer rules on consent, liability, identity, redress and oversight. The report also raises a broader infrastructure question: agentic finance will depend not only on AI models, but also on trusted data access, digital identity, payments systems and supervisory tools that can detect risks across the market.

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UK launches toy safety review as AI-enabled toys emerge

The UK government has launched a Call for Evidence on toy safety, including whether existing rules remain suitable as AI-enabled toys and online shopping create new risks for children.

The review is led by the Department for Business and Trade and the Office for Product Safety and Standards. It aims to assess whether the UK’s toy safety framework is fit for modern products and purchasing habits.

The government said the Call for Evidence will examine issues including chemical safety and toys that use AI features.

Consumer Protection Minister Kate Dearden said toy safety rules must keep pace with changes in how people shop and the types of toys children use.

The Call for Evidence is open until 6 October 2026 and invites views from parents, consumer groups, businesses, enforcement authorities and the wider public.

The review forms part of a wider UK programme to reform product safety rules, including measures aimed at unsafe goods sold through online marketplaces.

It does not introduce new toy safety rules immediately, but it will help the government decide how to update the framework.

Why does it matter?

AI-enabled toys raise product safety questions that go beyond traditional concerns such as chemicals, small parts or physical defects. Connected and interactive toys may involve software, data use, voice interaction, recommendation systems or adaptive behaviour, creating new risks for children and new responsibilities for manufacturers, retailers and online marketplaces. The UK review shows how AI is entering mainstream consumer product safety policy, not only digital regulation.

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UAE Central Bank approves dirham stablecoin for retail use

The UAE Central Bank has issued a No Objection Certificate allowing the dirham-backed stablecoin DDSC to go live on selected exchange platforms regulated by Dubai’s Virtual Assets Regulatory Authority.

DDSC was developed through a collaboration between International Holding Company, First Abu Dhabi Bank and Sirius International Holding. The stablecoin is pegged 1:1 to the UAE dirham and operates on ADI Chain, an institutional Layer-2 blockchain.

The latest clearance follows earlier Central Bank approval for the launch of DDSC, announced in February 2026. The new no-objection certificate allows the stablecoin to partner with selected VARA-regulated exchange platforms.

The regulatory structure reflects the UAE’s dual-layer approach to digital assets. The Central Bank oversees payment tokens and monetary stability requirements, while VARA licenses and supervises virtual asset platforms in Dubai.

DDSC is designed to support digital payments, including peer-to-peer transfers, merchant payments and supplier settlements in dirhams.

The project has already been tested in institutional transactions, including a reported AED 110 million transfer on ADI Chain.

The approval marks another step in the UAE’s effort to build a regulated dirham-denominated digital payment infrastructure.

Why does it matter?

The DDSC approval demonstrates that the UAE is establishing a regulatory framework for stablecoins tied to its national currency. Central Bank clearance combined with VARA-regulated exchange access could make dirham-backed tokens more usable in payments, settlement and digital asset markets. The case also highlights a broader regulatory model in which monetary authorities oversee the approval of payment tokens, while specialised virtual asset regulators supervise exchange platforms.

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Spain pushes for AI regulation to protect workers

Spain has called for stronger regulation of AI and algorithmic management in the workplace, arguing that digital technologies should strengthen workers’ rights rather than undermine them.

Speaking at the VI Ibero-American Ministerial Conference on Labour in Avilés, Spain’s Second Vice President and Minister of Labour, Yolanda Díaz, urged governments across the region to establish governance frameworks that ensure transparency, human oversight and the ethical use of AI in employment.

The conference focused on two priorities shaping the future of work. Ministers agreed on the need to professionalise, formalise and improve working conditions in the care sector, recognising its economic and social importance while addressing the precarious conditions faced by many workers, particularly women.

Delegations also examined the growing use of algorithmic management, stressing that governments should actively regulate AI to protect labour rights.

The meeting concluded with the adoption of the Avilés Ministerial Declaration and the Ibero-American Commitment on the Social and Solidarity Economy 2026–2030. Together, the documents establish shared principles on care work, algorithmic governance and labour rights while strengthening regional cooperation to promote inclusive economic development, quality employment and more resilient labour markets ahead of the XXX Ibero-American Summit in Madrid later this year.

At the same time, the commitment strengthens regional cooperation to promote inclusive economic development, quality employment and more resilient labour markets ahead of the XXX Ibero-American Summit scheduled to take place in Madrid later this year.

Why does it matter?

The conference reflects growing international concern that AI is reshaping the workplace faster than labour regulations are evolving. By calling for greater transparency, human oversight and accountability in algorithmic management, Spain is arguing that AI should improve working conditions without weakening workers’ rights or limiting human decision-making.

The adoption of shared regional principles also highlights how labour policy is becoming an increasingly important part of AI governance. As algorithmic systems play a larger role in hiring, scheduling, performance management and other employment decisions, governments are placing greater emphasis on ensuring that technological innovation remains aligned with fairness, inclusion and decent work.

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South Africa releases draft crypto tax guide

The South African Revenue Service has released draft guidance on how crypto assets should be taxed under existing income tax and capital gains tax rules.

The Draft Guide to the Taxation of Crypto Assets is open for public comment until 31 August 2026. It provides guidance on tax consequences that may arise when taxpayers hold or transact in crypto assets.

SARS treats crypto assets as intangible assets rather than currency. The draft guide says taxpayers must apply normal tax rules to determine whether amounts received or accrued from crypto transactions are revenue or capital in nature.

Tax treatment will depend on the facts of each case, including the taxpayer’s intention, the nature of the transaction and whether the asset is held as trading stock or on capital account.

The guide covers activities such as selling crypto assets for fiat currency, swapping one crypto asset for another, using crypto assets to pay for goods or services, mining, staking, decentralised finance, airdrops and hard forks.

The draft also notes that South Africa has implemented the Crypto-Asset Reporting Framework, requiring reporting crypto-asset service providers to collect and report transaction data to SARS.

SARS said the guide is foundational and not a binding general ruling, meaning taxpayers should still consider the specific characteristics of each crypto asset and transaction.

Why does it matter?

The draft guide gives taxpayers and crypto service providers clearer expectations on how South Africa’s existing tax system applies to digital assets. Treating crypto as intangible property rather than currency means trading, staking, mining, swaps and payments can create income tax or capital gains tax consequences depending on the circumstances. CARF reporting also increases tax authority visibility over crypto transactions, moving enforcement towards data-driven oversight and making non-disclosure harder.

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UK finalises crypto regime with lower stablecoin capital coefficient

The UK Financial Conduct Authority has finalised key parts of its new cryptoasset regime, which will bring a broad range of crypto firms into full FCA authorisation from 25 October 2027.

The regime will apply to firms carrying out regulated cryptoasset activities, including trading platforms, intermediaries, custodians, stablecoin issuers and firms arranging staking.

As part of the package, the FCA has reduced the stablecoin issuance capital requirement coefficient from 2% to 1%. The regulator said the change makes the prudential framework more proportionate for larger issuers while maintaining the robustness of the overall regime.

The FCA said the new framework moves the UK beyond the anti-money laundering and financial promotions standards that previously defined its role in crypto markets.

The policy package includes final rules and guidance on stablecoin issuance, regulated cryptoasset activities, admissions and disclosures, market abuse, prudential requirements and the application of the FCA Handbook.

Under the stablecoin rules, non-systemic UK-issued qualifying stablecoins will be subject to requirements covering issuance, backing assets, redemption, safeguarding and disclosures.

Firms will be able to apply for authorisation between 30 September 2026 and 28 February 2027, ahead of the mandatory regime taking effect in October 2027.

Why does it matter?

The FCA’s policy package marks a major shift from limited crypto oversight towards a full authorisation-based regime. For stablecoin issuers, the reduction of the K-SII coefficient from 2% to 1% shows the regulator responding to industry concerns about proportionality and competitiveness while keeping baseline prudential safeguards. The wider regime could give firms clearer rules for operating in the UK, but it will also raise compliance expectations for platforms, custodians, intermediaries and staking providers.

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