The European Banking Authority (EBA) published its final Guidelines on the orderly redemption of token holders in case of crisis of the issuer. The Guidelines, which are addressed to competent authorities designated under the Markets in Crypto-Assets Regulation (MiCAR), cover issuers of asset-referenced tokens (ARTs) and of e-money tokens (EMTs). The Guidelines specify the content of the redemption plan to be developed in going concern, including the liquidation strategies of the reserve of assets, the mapping of critical activities, the content of the redemption claims, the main steps of the redemption process, and the elements that may lead to the trigger of the plan by the competent authority.

Banco de Portugal published a paper that provides an overview of the underlying components of the decentralized finance (DeFi) ecosystem, as well as its associated risks from the perspective of a financial supervisory authority. While DeFi inherits the risks present in traditional finance, some of these risks could be amplified due to the lack of a clear regulatory framework and the intrinsic features of the DeFi space. Therefore, this paper also takes a closer look at the regulatory challenges involved, including the promise of self-regulation, and explores potential avenues for addressing these challenges without stifling the innovation that DeFi can foster.

The U.S. Federal Reserve Bank of Kansas City published a paper by Franklin Noll on "cash bill pay" services that allows consumers to make digital (e.g., bill) payments with cash at participating retailers. A recent Atlanta Fed survey found that American consumer preferences to pay with cash remain pervasive for various reasons, including the costs and other impediments involved in moving to digital payments, lack of needed identification, former credit or banking problems, and the desire for privacy. The article goes on to describe the two main cash bill pay service ("walk-up" and "barcode") consumer experiences, and the costs that may make the service expensive for some.

The Financial Stability Board (FSB) published a report on the potential financial stability implications of distributed ledger technology (DLT) based financial asset tokenization. The report opines that many of the purported benefits of tokenization have yet to be fully proven, may not be uniquely achievable through tokenisation, and may involve trade-offs that might negate the benefits. And several vulnerabilities are identified relating to liquidity and maturity mismatch; leverage; asset price and quality; interconnectedness; and operational fragilities. Tokenization could have implications for financial stability if the tokenised part of the financial system scales up significantly, if increased complexity and opacity of tokenisation projects lead to unpredictable outcomes in times of stress, and if identified vulnerabilities are not adequately addressed through oversight, regulation, supervision, and enforcement.

The Bank for International Settlements (BIS) published a Committee on Payments and Market Infrastructures (CPMI) report that sets out the concepts related to digital tokens and programmable platforms. Tokenization arrangements can change existing market structures by providing platform-based intermediation across the end-to-end life cycle of financial assets. While this could decrease transaction costs and enable innovative use cases, the potential of token arrangements to improve the safety and efficiency of the financial system will require sound governance and risk management. The risks typically associated with financial market infrastructures also apply to token arrangements, but they may materialise differently. Developments in tokenisation offer an opportunity for central banks to reflect on the role of central bank money in the digitalising financial system.

The Federal Reserve Bank of Minneapolis published a paper that advocates for a legal prohibition or capital tax on "bitcoin" to support governments' abilities to run permanent primary deficits. To be more accurate, the paper uses bitcoin as a metaphor for risk-free private-sector securities that are in fixed supply and that are not a claim to any real resources or "useless pieces of paper". The analysis seems to be based on the idea that risk averse consumers are willing to hold government securities and bitcoin even when the real return on these securities is very low. The virtually impenetrable analysis suggests that the existence of "bitcoin" forces the government maintain a balanced budget, which some might view as a good thing.

The European Central Bank's (ECB's) Ulrich Bindseil and Jürgen Schaaf published a paper that argues that, if the price of bitcoin continues to rise, there will be a redistribution of wealth to early bitcoin adopters at the expense of consumption of the rest of society, assuming that bitcoin does not increase the productive potential of the economy. In a theoretical scenario of ever-rising Bitcoin prices, this wealth shift will be a lasting legacy, with early adopters' luxury consumption financed by the diminished consumption of those who missed out. Moreover, the corresponding impoverishment of the rest of society, will endanger cohesion, stability and ultimately democracy.

The Financial Stability Board (FSB) published (i) a consolidated progress report for 2024 reporting on a broad range of actions being progressed as part of the G20 Roadmap for Enhancing Cross-Border Payments; (ii) a progress report on the implementation of the Legal Entity Identifier (LEI); and (iii) an annual progress report on meeting the improved user experience targets for cross-border payments. While more than half of the planned actions set out by the G20 have been completed, the FSB's key performance indicators which measure key aspects of the user experience in using payments services, suggest that further efforts are needed. The FSB emphasizes the importance of intensified effort and commitment from a range of stakeholders, including by domestic regulatory/oversight authorities and payments services providers.

The U.S. Securities and Exchange Commission (SEC) has submitted a Civil Appeal Pre-Argument Statement ("Form C") appealing the August 7, 2024 final judgment of Judge Analisa Torres of the US District Court for the Southern District of New York, enjoining Ripple from further violations of Section 5 of the Securities Act of 1933 and imposing a $125 million civil penalty. The new SEC action will drag the whole legal process that started in 2020 out at least until July 2025. https://cointelegraph.com/news/sec-ripple-appeal-no-challenge-xrp-not-a-security

The OECD published a report that presents a mapping exercise to explore the different approaches to digital identity of G7 members. It draws out significant commonalities, as well as differences. In doing so, this document is intended to provide a resource for policymakers and stakeholders looking to understand the current state of digital identity policy and governance across the G7. This document may also serve as a foundation for discussions and planning around more interoperable digital identity systems.

The IMF published a chapter of the October 2024 edition of the Global Financial Stability Report that assesses recent developments in AI and Generative AI and their implications for capital markets, using new analytical work and results from a global outreach to market participants and regulators. Evidence from labor markets and patent filings suggests that adoption of AI in capital markets is likely to increase significantly in the near future, and AI could cause large changes in market structure through the greater and more powerful use of algorithmic trading and novel trading and investment strategies. AI may reduce some financial stability risks by enabling superior risk management, deepening market liquidity, and improving market monitoring by both participants and regulators. At the same time, new risks may arise, including increased market speed and volatility under stress, more opacity and monitoring challenges of non-bank financial institutions, increased operational risks as a result of reliance on a few key third-party AI-service providers, and increased cyber and market manipulation risks. Many of these risks are addressed by existing regulatory frameworks, but important new and unforeseen developments may arise.

DTCC and Japan Securities Clearing Corporation (JSCC) conducted a proof-of-concept (POC) to design and develop a cross-industry and cross-product collateral ecosystem by making full use of the "DTCC Digital Launchpad" distributed ledger technology (DLT) based platform. The POC explored how central counterparties (CCPs) could use tokenization to optimize the collateral management process for clearing members and their buy-side firms. In particular, it examined how margin calls and their associated processes could be automated, made more efficient and transparent for all participants using digital assets and smart contracts - or rules that automatically execute on a distributed ledger when certain conditions are met.

In 2024, the ECB invited market participants to test how new technologies like distributed-ledger technologies (DLT) would work for central bank money settlement. The so-called ECB trials and experiments are aimed at exploring the potential of digital payments targeting a wholesale central bank digital currency (CBDC). Together with leading institutions, infrastructures and fintech businesses, Deutsche Börse Group contributes to this transformative endeavor with its Clearstream and Eurex Clearing businesses. The Deutsche Börse maintains a list of all such use-case experiments here.

The Health Employees Superannuation Trust Australia (HESTA) and ANZ are examining whether the bank's A$DC stablecoin could allow HESTA to streamline pension payment reconciliation. Currently, HESAT member firms contributing to staff pensions pay the money across and separately send data about what it relates to. ANZ's idea is for the data to accompany the stablecoin payment as part of a smart contract. This could eliminate the entire reconciliation process and employees would be able to see their contributions in real time.

The Bank for International Settlements (BIS) launched Project Aperta (Latin for "open") to explore how to reduce frictions and costs in global finance by enabling seamless cross-border data portability. The project aims to connect the domestic open finance infrastructures of different jurisdictions. The initial use case to be explored is in trade finance for small and medium-sized enterprises (SMEs), with many more applications to follow. Project Aperta collaborators include the Central Bank of the United Arab Emirates, the Banco Central do Brasil, the U.K. Financial Conduct Authority , the Hong Kong Monetary Authority, and the Global Legal Entity Identifier Foundation.

Paxos launched a new stablecoin payments platform targeting payment service providers (PSP) and Fintechs that want to enable stablecoin payments. Global payment processing company Stripe will be the first PSP to integrate the new platform into its system. The infrastructure will be featured on Stripe's Pay with Crypto product, which allows users to accept stablecoin payments settling in fiat currencies. Once a stablecoin payment is received via Paxos, users can choose whether to immediately convert to fiat currency and settle in local currency, or pay out stablecoin balances directly to merchants. Merchants will have the ability to issue refunds by instantly converting fiat into the stablecoin originally used, then sending directly to the wallet used in the initial payment. https://paxos.com/blog/paxos-launches-new-stablecoin-payments-platform/ https://docs.stripe.com/crypto/integrate-pay-with-crypto

The National Bank of Cambodia (NBC) and Ant International have reportedly launched cross-border QR code payments. The payments will occur between NBC's Bakong payment system and Ant International's Alipay+ cross-border mobile payments and digital solutions platform. This will allow users of 12 international payment apps, including Alipay, AlipayHK, Touch 'n Go eWallet, GCash, Kakao Pay, and others, to make seamless payments to merchants in Cambodia by scanning KHQR codes. This will support payments in Cambodian riels. In September 2024, the NBC and Bank Negara Malaysia launched a similar scheme for payments between Cambodia and Malaysia.

The Bank for International Settlements (BIS) published two Committee on Payments and Market Infrastructures (CPMI) reports that offer key insights and recommendations on the interlinking and interoperability of payment systems to enhance cross-border payments. The first report discusses design choices and the risk implications of interlinked fast payment systems (FPSs) and the role of application programming interfaces (APIs), setting out the key decisions for governance and outlines recommendations for their oversight. The second report presents ten recommendations to promote the harmonization of APIs to enhance cross-border payments. https://www.bis.org/cpmi/publ/d223.htm https://www.bis.org/cpmi/publ/d224.htm

"This paper highlights the growth and importance of stablecoins since they were launched 10 years ago. We outline their impact on the cryptocurrency ecosystem as well as the financial system as a whole, while also summarising the main findings in the literature. Finally, we outline future research directions."

Chinese scientists have mounted what they say is the world's first effective attack on a widely used encryption method using a quantum computer. The breakthrough poses a "real and substantial threat" to the long-standing password-protection mechanism employed across critical sectors, including banking and the military, according to the researchers.