Fintech Daily Digest

U.S. President Donald Trump signed an Executive Order (XO) that ordered the creation of a cryptocurrency working group tasked with proposing new digital asset regulations and exploring the creation of a national cryptocurrency stockpile. The working group will include the Treasury secretary, chairs of the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), but notably no one from the Federal Reserve or Federal Deposit Insurance Corporation (FDIC) . The XO also ordered that banking services for crypto companies be protected, alluding to industry claims that the Fed and FDIC have directed lenders to cut crypto companies off from banking services. https://www.whitehouse.gov/presidential-actions/2025/01/strengthening-american-leadership-in-digital-financial-technology/

U.S. President Donald Trump signed an Executive Order (XO) "prohibiting the establishment, issuance, circulation, and use of a central bank digital currency (CBDC) within the jurisdiction of the United States" on the grounds that they "threaten the stability of the financial system, individual privacy, and the sovereignty of the United States". The XO uses the standard BIS (2020) CBDC definition: "a form of digital money or monetary value, denominated in the national unit of account, that is a direct liability of the central bank" which is a bit problematic, because it encompasses both retail and wholesale CBDC. It's problematic because, by that definition, the Federal Reserve (Fed) is already running a WCBDC in the form of commercial bank reserve and settlement accounts. Instead, the White House could have followed the language of a bill introduced to the U.S. House of Representatives by Rep. Tom Emmers, the "CBDC Anti-Surveillance State Act". It starts with the same CBDC definition as the White House XO, but goes on to narrow down the impact of the bill to prohibit the Fed from "offer[ing] products or services directly to an individual; maintain[ing] an account on behalf of an individual; or issu[ing] a central bank digital currency, or any digital asset that is substantially similar under any other name or label, directly to an individual [or] indirectly to an individual through a financial institution or other intermediary… [This] may not be construed to prohibit any dollar-denominated currency that is open, permissionless, and private, and fully preserves the privacy protections of United States coins and physical currency." https://emmer.house.gov/_cache/files/1/b/1b5d3177-a835-4d7f-857c-8eaa765dc2ec/C9A5E6203EC89BFB3F9DEF702726560B.cbdcs-final.pdf

The Bank for International Settlements (BIS) published a paper on how technology can enhance privacy in digital payment systems. It classifies privacy-enhancing designs along the dimensions of privacy versus auditability, and soft institution- versus hard technology-based solutions. It maps existing technologies into this taxonomy and assesses them. Sophisticated techniques allow having both hard privacy and limited transparency by employing hard-coded rules that dictate which data remains inaccessible. On balance, there is promise in novel concepts like zero-knowledge-proofs, but current technologies suffer from security and computational capacity limitations in.

Eurex Clearing has received non-objection letter from the German Federal Financial Supervisory Authority (BaFin) for distributed ledger technology (DLT) supported collateral mobilization for its clients. The initiative is a collaboration with HQLAᵡ and Clearstream, with J.P. Morgan planning to participate as the pilot clearing member. The objective is to ensure that securities collateral can be accessed and utilized instantly to fulfil central counterparty (CCP) margin requirements, regardless of its physical location. https://www.hqla-x.com/post/eurex-clearing-collaborates-with-hqlax-on-digital-collateral-mobilization

"Stablecoins are of vital importance to next-generation financial services because they provide genuine competition to the payment systems of today, even in the US where the otherwise innovative financial system lags much of the world. American payment cards and banking apps work fine and give a safe and reliable service to customers, but the system is slow and expensive with costs rather unevenly distributed towards the less well off (who pay a lot to use what little money they have). More competition would be good for everyone."

The Federal Reserve Bank of Atlanta published an article on the growing use of stablecoins. It points to retailers like Overstock, Chipotle, Whole Foods, and GameStop now accepting them, Stripe enabling merchants to accept USD Coin (USDC). Regal Cinemas offering a 10% discount on tickets and concessions for USDC payments, and Travala letting users book travel services with USDC or USDT. Benefits to merchants include reduced transaction fees, immediate settlement, and attracting crypto-savvy customers. However, the article points to concerns over the stability of the assets backing them, regulatory uncertainty, and security vulnerabilities like cyberattacks, and stablecoins used in decentralized finance platforms facing risks such as smart contract failures and liquidity issues.

The Taiwan Financial Supervisory Commission reportedly wants to introduce a draft law that would allow banks to issue their own stablecoins that will be jointly managed by the Taiwan central bank. "Chairman of the Taiwan FSC, Peng Jinlong, stated that stablecoins will be used as a bridge that connects the gap between fiat currencies and cryptocurrencies, making it easier for investors to access the crypto trading market. In the case of Taiwan, stablecoins issued by local banks will be pegged to the new Taiwan dollar instead of the U.S. dollar." https://money.udn.com/money/story/5613/8508618

Acting Chair of the Securities and Exchange Commission (SEC) Mark Uyeda created a Crypto Task Force to be led by Commissioner Hester "Crypto Mom" Peirce. The Task Force's focus will be to help draw clear regulatory lines, provide realistic paths to registration, craft sensible disclosure frameworks, and deploy enforcement resources judiciously. "The SEC [under previous Chair Gensler] relied primarily on enforcement actions to regulate crypto retroactively and reactively, often adopting novel and untested legal interpretations along the way. Clarity regarding who must register, and practical solutions for those seeking to register, have been elusive. The result has been confusion about what is legal, which creates an environment hostile to innovation and conducive to fraud." https://www.sec.gov/newsroom/press-releases/2025-30

USDC stablecoin issuer Circle has acquired Hashnote, the issuer of the largest tokenized money market fund (TMMF), USYC. Circle intends to fully integrate USYC with USDC, offering seamless 24/7/365 access between TMMF collateral and USDC. The deal is bolstered by a strategic partnership with institutional crypto trader DRW via its subsidiary Cumberland, which incubated Hashnote. Cumberland will expand its institutional-grade liquidity and settlement capabilities in USDC and USYC, where permitted. https://www.circle.com/pressroom/circle-announces-acquisition-of-hashnote-and-usyc-tokenized-money-market-fund-alongside-strategic-partnership-with-global-trading-firm-drw

The Bank for International Settlements (BIS) published a paper on the impact of reporting requirements on buy-now-pay-later (BNPL) credit usage. Using a dataset of BNPL users from a large digital platform and exploiting a credit reporting policy change, it documents that consumers significantly reduce BNPL usage when the BNPL lender becomes subject to credit reporting regulation. This reduction is particularly pronounced among borrowers with default histories, who also show improved repayment behaviors compared to those without such records. The decrease in BNPL usage also leads to a reduction in online consumption, supporting the financial constraint hypothesis. These findings indicate that information sharing can help mitigate overborrowing and overspending, with stronger effects seen among younger borrowers, those who previously spent more, or those with credit cards.

Cointelegraph published an article on the slim prospects for U.S. retail central bank digital currency (CBDC) issuance, now that Donald Trump has been sworn in as President, that includes some words of wisdom from yours truly.

The Journal of Economics and Statistics (JES) published a paper by Bank of Thailand (BOT) staff published a paper that analyzes end-to-end transaction data from the central bank's seven-month 2023 retail central bank digital currency (CBDC) pilot. Findings indicate that the three financial service providers (FSPs) manage their CBDC holdings and liquidity by adjusting redemptions but do not adjust issuances in response to retail payments. Retail users, on the other hand, tend to use CBDC as a payment method, with usage positively correlated with reward incentives. The network topology analysis indicates that the hybrid architecture tested in this pilot creates a less connected network. CBDC is distributed sparsely and slowly within the network, relying heavily on a few key FSPs. This suggests the current distribution model is limited in effectiveness and could be improved.

It is important to rely on preventive measures that reduce the scale of double-spending attacks on offline payment platforms. An example of such a measure is secure elements. These however are limited in compute and storage, making the design of solutions that offer comparable privacy guarantees to those of physical cash challenging. We address this with a protocol that offloads most of the payment computation to the user's mobile device and restricts the computation on the secure element to deleting spent tokens, and generating a signature with a computation equivalent to that of elliptic curve digital signature algorithms (ECDSA). We claim that the use of mobile devices or enhanced smart card-based devices are required for secure consumer-to-consumer payments. To further harden the protocol, we enable the efficient identification of double spenders on the off-chance an attacker successfully double spends. Finally, we prove its security in the ideal/real world paradigm, and evaluate its performance to demonstrate its practicality. We use Pedersen commitments to allow one to commit to a vector of messages m without leaking any information about the committed vector.

Established in 1999, Telpo is China's smart terminal and solution provider dominating the payment and retail sectors. Offering EFT-POS, mobile POS, cash registers, and self-service kiosks, Telpo boasts a diverse product line. With 200+ engineers, Telpo holds over 300 technology patents and nearly 400 product certificates, achieving a monthly production capacity of 300,000 units.

"Apple Intelligence is the personal intelligence system that brings powerful generative models to iPhone, iPad, and Mac. For advanced features that need to reason over complex data with larger foundation models, we created Private Cloud Compute (PCC), a groundbreaking cloud intelligence system designed specifically for private AI processing. For the first time ever, Private Cloud Compute extends the industry-leading security and privacy of Apple devices into the cloud, making sure that personal user data sent to PCC isn't accessible to anyone other than the user - not even to Apple. Built with custom Apple silicon and a hardened operating system designed for privacy, we believe PCC is the most advanced security architecture ever deployed for cloud AI compute at scale."

The Quarterly Journal of Economics (QJE) published a paper by Eric Budish that shows that Nakamoto's novel form of trust is deeply economically limited. A zero-profit condition on the quantity of honest blockchain "trust support" (work, stake, etc.) and an incentive-compatibility condition on the system's security against majority attack together imply an equilibrium constraint which says that the "flow" cost of blockchain trust has to be large at all times relative to the benefits of attacking the system. This is extremely expensive relative to traditional forms of trust and scales linearly with the value of attack. The paper's analysis is consistent with the continued use of cryptocurrencies and blockchains for black market purposes, and more generally in use cases where users are willing to pay the high implicit costs of anonymous, decentralized trust. See also: https://www.linkedin.com/pulse/slow-blockchain-mathematical-certainty-patrick-mcconnell/

The Bank of Canada (BOC) published a paper on designing inclusive and user-friendly digital payment systems, focusing on fostering empathy for and identifying the needs of users who exhibit behaviors that indicate they encounter accessibility or usability barriers in digital systems. Specifically, it examines two types of users based on two common behaviors: users who rely on others to perform tasks and those who avoid interacting with technology. The findings show that individuals in the two groups avoid systems they expect lack usability. Addressing these issues through standard accessibility practices, live assistance and thoughtful interface design can enhance user interaction and trust. For accessibility issues that cannot realistically be eliminated, technology that enhances cooperative relationships and allows account owners to control information sharing is key.

As Shannon taught us, effective communication is not just about capacity-it's about encoding information to suit the channel. By leveraging multimodal interaction, predictive AI, and hybrid approaches to interface design, we can create intelligent systems that amplify human capabilities. As such, it's likely that the next era of human-computer interaction will not be about replacing GUIs with conversational interfaces, but harmonising the two into systems that are greater than the sum of their parts.

Chainalysis projects that the total volume of illicit crypto transactions for 2024 could surpass $51 billion, of which 63% involved stablecoins. This is part of a broader ecosystem trend in which stablecoins also occupy a sizable percentage of all crypto activity, due to their wide array of practical use cases in a range of markets. The upside from a financial integrity perspective, is that stablecoin issuers can and do freeze funds if they are made aware of their use by illicit actors. For example, Tether has frozen addresses of concern linked to scams, terrorist financing, and sanctions evasion, which can make stablecoins a poor tool for the transfer of value by illicit actors. Nonetheless, despite these ecosystem-wide trends, some forms of crypto crime, such as ransomware and darknet market sales, remain BTC-dominated. https://www.chainalysis.com/blog/2025-crypto-crime-report-introduction/

This article is a reflection on the ECB DLT trials and the DLT Pilot regime, and what they might say about the possible trajectory of the evolution of the Capital Markets Union (CMU) project. It concludes that Europe's push toward tokenization and a Digital CMU feels more like an evolutionary process than a revolutionary one. The ECB's trials and the EU's DLT Pilot Regime signal genuine interest in modernizing financial infrastructure, but progress will be slow, measured, and tightly controlled. While it's unlikely that a bold, new platform will emerge purely from private sector experimentation, a carefully managed public-private partnership could chart the path forward. Whether this effort leads to a more integrated, efficient capital market or simply another chapter in Europe's long history of cautious innovation remains to be seen. But one thing is clear: Europe's digital finance ambitions are no longer just theoretical-they're being tested, one experiment at a time.