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Weekly Global Stablecoin & CBDC Update
This Week's Stories
Financial Stability Board Chair Klaas Knot issued a letter to G20 leaders on November 20, 2025, ahead of their November 22-23 summit warning that the rapid evolution of private credit markets and stablecoins warrant close monitoring for financial stability risks. The FSB emphasized operating in a world of “considerable challenge” requiring vigilance on emerging financial market structures. The warning comes as the FSB found significant gaps and inconsistencies in implementation of crypto and stablecoin recommendations across jurisdictions in an October 2025 assessment.
Key Takeaways:
- FSB Chair warns G20 leaders November 20 that stablecoin evolution requires close financial stability monitoring
- October 2025 FSB assessment found significant implementation gaps in crypto-stablecoin recommendations
- Private credit market growth alongside stablecoins identified as dual emerging systemic concerns
- Letter sets agenda for G20 November 22-23 summit financial stability discussions
Why It Matters:
- Demonstrates FSB positioning stablecoins as priority G20 financial stability issue
- Highlights international regulatory coordination challenges despite agreed frameworks
- Could influence G20 commitments to harmonized stablecoin implementation standards
- Validates ongoing concern about stablecoin risks despite regulatory progress in major jurisdictions
Central banks in Europe and Asia warned on November 22, 2025, that stablecoin volatility from trade tariffs could trigger fire-sales of U.S. Treasuries similar to the 2008 Lehman Brothers collapse that froze global credit markets. Dutch National Bank Governor Olaf Sleijpen, a European Central Bank decision-maker, told the Financial Times that a run on dollar-pegged stablecoins could force rapid Treasury selloffs and require central banks to rethink monetary policies. The Bank for International Settlements and Reserve Bank of Australia concurred that stablecoin market stress increases during global economic turmoil precisely when the Treasury backing becomes less liquid and stable. A recent DNB report highlighted that while the stablecoin market “could hit $2 trillion within three years under the U.S. GENIUS Act,” a “huge risk lurks beneath its shiny veneer” due to concentration—Tether and Circle control 80%. Federal Reserve Governor Stephen Miran countered that “because GENIUS Act payment stablecoins do not offer yield and are not backed by federal deposit insurance, I see little prospect of funds broadly fleeing the domestic banking system.” Coinbase Chief Policy Officer Faryar Shirzad argued that “full-reserve backing makes stablecoins safer than banking” and their “broader adoption actually reinforces stability.”
Key Takeaways:
- ECB and Asian central banks warn stablecoin runs could trigger Treasury fire-sales rivaling March 2020 stress
- DNB projects $2 trillion stablecoin market by 2028 under GENIUS Act with 80% controlled by Tether-Circle duopoly
- Fed Governor Miran disputes banking system flight risk citing lack of yield and deposit insurance
- RBA reports stablecoin volume grew 50%+ in 12 months to June 2025 with projections to $4 trillion by 2035
Why It Matters:
- Highlights systemic risk debate as stablecoins approach scale requiring Treasury market impact assessment
- Demonstrates divergent views between U.S. officials promoting stablecoins and foreign central banks warning of contagion
- Validates concern that rapid stablecoin growth outpaces regulatory preparedness for systemic relevance
- Could influence stablecoin reserve composition rules and concentration limits in future regulations
Khyber-Pakhtunkhwa (K-P) Chief Minister Muhammad Sohail Afridi has approved the Khyber-Pakhtunkhwa Digital Payments Act 2025, positioning the province as Pakistan’s pioneer in developing a comprehensive legal framework for a digital economy. The legislation mandates that all payment systems across government departments, businesses, and the service sector transition to QR code-based digital payments. A significant incentive provision offers a two-year tax relief period for previously undocumented business entities registering under the law and receiving digital payments through QR codes, encouraging informal businesses to formalize without immediate taxation concerns. The government will implement supporting infrastructure including public Wi-Fi in commercial zones and integrate financial literacy into academic curricula. This initiative aligns with K-P’s broader Digital Khyber-Pakhtunkhwa vision announced previously, emphasizing transparency and modernization.
Key Takeaways:
- K-P mandates QR code-based digital payments across all government departments, businesses, and service sectors, establishing the first such provincial framework in Pakistan
- Two-year tax relief incentive for previously undocumented businesses encourages formalization while protecting from immediate sales tax liabilities through digital payment adoption
- The law includes strict data protection safeguards aligned with international security and privacy benchmarks to ensure consumer and business data integrity
- Supporting infrastructure includes public Wi-Fi deployment in commercial zones and integration of digital and financial literacy into school curricula
- Refusal to accept digital payments or charging extra fees constitutes a violation of the legislation, ensuring vendor compliance and consumer protection
Why It Matters:
- Represents a pivotal shift toward financial inclusion and cashless governance in a region with historically significant informal economy participation
- Creates a regulatory template that federal and provincial governments nationwide may adopt, potentially transforming payment infrastructure across Pakistan
- Addresses corruption and revenue stability simultaneously by formalizing transactions and creating transparent, auditable payment records for government institutions
- Demonstrates recognition of digital payments as critical infrastructure for modern economic governance, positioning K-P competitively within the broader South Asian digital economy
- Establishes precedent for balancing regulatory compliance with economic accessibility, protecting small businesses during formalization without imposing prohibitive compliance burdens
Bitcoin and major altcoins rebounded on November 23, 2025, after hitting extreme oversold levels, with Bitcoin rebounding near $84,173 following the worst crypto market selloff since November began. Over $206 million in weekend liquidations across 117,928 traders helped ease selling pressure as thin weekend liquidity magnified both downturns and rebounds. The broader crypto market capitalization rose 3.29% in 24 hours to $2.95 trillion. XRP led altcoin gains jumping 7%, while Zcash (ZEC) surged 14% extending one of crypto’s strongest year-to-date rallies. Bitcoin’s RSI flashed extreme oversold signals—a zone that historically preceded short-term recoveries in 2023 and March 2025. Despite the rebound, sentiment remained fragile with the Crypto Fear and Greed Index standing at 10, its lowest reading since CoinMarketCap began recording in June 2023, indicating continued trader caution.
Key Takeaways:
- Bitcoin rebounds November 23 after extreme oversold RSI signal from $81,600 lows
- $206 million in liquidations across 117,928 traders ease selling pressure on weekend
- XRP jumps 7%, ZEC surges 14% amid broader market capitalization recovery to $2.95 trillion
- Crypto Fear and Greed Index at 10/100 despite rebound, indicating persistent caution
Why It Matters:
- Demonstrates technical oversold conditions triggering relief rallies in bear markets
- Validates importance of weekend liquidity dynamics in amplifying price volatility
- Shows continued fragility despite rebounds, with extreme fear limiting conviction
- Could signal potential stabilization if buyers maintain support above key price levels
U.S. Treasury Secretary Scott Bessent announced plans to review regulatory roadblocks affecting blockchain technology, stablecoins, and new payment innovations. This significant policy development signals a potential shift toward more supportive regulatory approaches in the U.S. financial landscape. The announcement, made on November 23, 2025, indicates the Treasury Department’s commitment to assessing and potentially easing barriers to blockchain and stablecoin integration into traditional finance. While specific timelines and scope details were not immediately disclosed, the focus on these critical infrastructure areas, including stablecoin issuance, reserve requirements, and payment rails, suggests increasing governmental recognition of digital asset technologies’ role in modernizing cross-border payments and financial systems. Stablecoins such as USDT and USDC have already achieved daily trading volumes exceeding $100 billion, underscoring the market’s maturity and the urgency of clarifying regulatory pathways.
Key Takeaways:
- Treasury Secretary signals regulatory review of blockchain and stablecoin frameworks without specific timelines or draft policy details
- Policy review directly impacts core crypto market infrastructure, compliance pathways, and issuance standards
- Announcement aligns with growing market adoption of stablecoins in institutional and cross-border payment contexts
- Review could reduce regulatory uncertainty and potentially accelerate institutional adoption of digital asset technologies
- Focus areas include blockchain infrastructure, reserve backing mechanisms, and payment innovation channels
Why It Matters:
- Market Impact: Historical patterns show that positive regulatory signals often precede 10-20% price surges in leading cryptocurrencies within days of announcements, potentially boosting market sentiment across major digital assets
- Financial Integration: Regulatory clarity on stablecoins could facilitate faster, more efficient cross-border transactions compared to traditional correspondent banking systems
- Institutional Adoption: Reduced regulatory uncertainty could enable broader corporate treasury adoption of stablecoins, potentially reshaping how businesses manage liquidity and conduct international payments
- Global Competition: Review comes as other jurisdictions (China, EU, UAE) advance CBDC and digital asset regulations, making U.S. regulatory clarity strategically important
- Infrastructure Development: Easing roadblocks could accelerate development of payment rails and settlement infrastructure integrating traditional finance with blockchain networks
Swedish fintech Klarna announced the launch of KlarnaUSD, a dollar-backed stablecoin designed to revolutionize cross-border payments. The token will operate on Tempo, a payments blockchain developed by Stripe in collaboration with crypto investment firm Paradigm. KlarnaUSD will initially facilitate Klarna’s internal settlement flows, with the mainnet launch expected in 2026. The stablecoin will eventually support both merchant and consumer payments globally. This represents a dramatic pivot for Klarna CEO Sebastian Siemiatkowski, who previously stated the company would be “the last major fintech to enter crypto.” Klarna positions KlarnaUSD as a faster, cheaper alternative to traditional banking intermediaries like SWIFT, targeting the $120+ billion in annual cross-border transaction fees. The company will become the first bank to deploy Stripe’s stablecoin stack for blockchain-based payments.
Key Takeaways:
- KlarnaUSD is fully backed by U.S. dollars and will launch on mainnet in 2026 via Stripe’s Tempo blockchain
- The stablecoin will initially power Klarna’s internal settlement operations, later expanding to merchants and consumers
- Cross-border transactions using stablecoins can avoid SWIFT intermediaries, reducing costs significantly
- Klarna represents the latest major fintech to embrace stablecoins, following PayPal, Stripe, and Visa
- The move demonstrates CEO Siemiatkowski’s strategic reversal on cryptocurrency adoption after earlier skepticism
Why It Matters:
- Industry Momentum: This signals accelerating mainstream adoption of stablecoins by legacy financial service providers, validating the technology’s viability for payments
- Cost Reduction: The $120+ billion annual cross-border payment fee represents enormous potential savings if stablecoin infrastructure can scale
- Regulatory Clarity: Klarna’s move reflects increased confidence stemming from regulatory frameworks like the GENIUS Act (U.S.) and MiCA (EU), providing legal certainty
- Competitive Pressure: Traditional payment rails (SWIFT, Visa, Mastercard) now face direct competition from blockchain-based alternatives, potentially reshaping global payments infrastructure
- Institutional Validation: When a platform managing 114 million customers adopts stablecoins, it legitimizes the technology for mainstream consumers and businesses
The European Central Bank issued a cautionary statement regarding the rapid expansion of the stablecoin market, emphasizing that regulators must maintain heightened vigilance despite currently limited financial stability risks. In its pre-release of the Financial Stability Review scheduled for Wednesday, the ECB noted that stablecoins are experiencing rapid growth and may expand into new use cases that could introduce financial-stability risks in the future. The organization underscored that although current risks appear manageable, the velocity and trajectory of stablecoin adoption warrant close oversight to prevent potential systemic vulnerabilities from emerging. The statement reflects ongoing concern among central banks globally about the integration of digital assets into mainstream financial infrastructure without sufficient safeguards.
Key Takeaways:
- Stablecoin market experiencing rapid, sustained growth with potential for expanded use cases
- ECB acknowledges current financial stability risks appear limited but warrant continued monitoring
- Future adoption patterns could introduce systemic risks that are not yet evident
- Regulatory vigilance is essential as the market evolves and expands into new applications
- Supervisory framework must adapt alongside stablecoin market developments
Why It Matters:
- Sets precedent for regulatory approaches across the EU and influences global stablecoin policy
- Reflects central bank acknowledgment that stablecoins are becoming mainstream infrastructure requiring oversight
- Signals potential for future regulatory tightening if growth and adoption accelerate
- Demonstrates need for proactive governance of digital assets before systemic risks crystallize
- Influences investor and issuer expectations regarding regulatory environment in Europe
Trust Stamp, a Nasdaq-listed AI-powered trust and identity solutions provider, announced a patent-protected framework (USPTO Patent #11,681,787) that embeds biometrically validated cryptographic chains of identity directly into stablecoins to support compliance with the GENIUS Act of 2025. The announcement comes in response to Financial Action Task Force warnings that stablecoins have become prevalent tools for money laundering, terrorist financing, and illicit activity by North Korean cybercriminals and drug traffickers. Trust Stamp’s solution binds each stablecoin unit to a tokenized, irreversibly transformed representation of the owner’s identity, creating a cryptographically provable ownership link without exposing personally identifiable information on-chain. The framework supports privacy-preserving provenance tracking, quantum-ready security, and facilitates compliance with GENIUS Act requirements that classify stablecoin issuers as financial institutions under anti-money laundering regulations.
Key Takeaways:
- Patent-protected technology enables embedded biometric identity validation within stablecoin architecture
- Solution designed specifically to comply with GENIUS Act’s AML/CFT and Know Your Customer requirements
- Enables cross-border due diligence and beneficial ownership verification without sharing raw KYC data
- Addresses FATF warnings by building compliance mechanisms directly into stablecoin infrastructure
- Applicable to payment stablecoins, institutional custody, tokenized deposits, and DeFi protocols
Why It Matters:
- Demonstrates practical path toward regulatory compliance for stablecoin issuers under GENIUS Act framework
- Directly addresses law enforcement and compliance needs highlighted by U.S. Treasury and White House
- Reduces friction in cross-border stablecoin transactions by automating identity verification
- Shows emerging infrastructure layer supporting next generation of compliant digital currencies
- Positions Trust Stamp as strategic player in regulated stablecoin ecosystem development
Southeast Asia’s initial enthusiasm for retail central bank digital currencies has significantly diminished as regional central banks shift focus toward wholesale CBDC pilots and stablecoin alternatives. According to the Monetary and Financial Institutions Forum’s 2024 Payments Survey, only 13% of central bank respondents now view CBDC networks as the most promising solution for cross-border payments, a dramatic decline from 31% the previous year. Central bankers remain concerned about financial stability risks, potential bank runs, and the complexities of managing retail CBDCs. However, countries like Singapore and Thailand continue advancing wholesale CBDC projects: Singapore’s three major banks successfully executed overnight lending transactions using Singapore dollar wholesale CBDC, while Thailand’s Project Inthanon with eight commercial banks demonstrated faster, more cost-effective interbank transactions. Cambodia’s Bakong CBDC achieved 330% of GDP in transaction volume by end-2024, largely driven by cross-border and tourism activity.
Key Takeaways:
- Retail CBDC enthusiasm collapsed from 31% to 13% among Southeast Asian central banks within one year
- Wholesale CBDCs emerging as preferred pathway with successful interbank pilots underway in Singapore and Thailand
- Central banks prioritize financial stability concerns over retail CBDC implementation timelines
- Cambodia’s Bakong demonstrates viable “CBDC” model for developing economies focused on financial inclusion
- Stablecoins increasingly viewed as viable alternative to retail CBDCs for cross-border payments
Why It Matters:
- Signals global regulatory shift away from retail CBDCs toward more targeted wholesale solutions
- Reflects learning from SVB collapse and concerns about direct CBDC-to-consumer banking disruption
- Shows pragmatic regional preference for stablecoin solutions that avoid central bank balance sheet expansion
- Indicates financial inclusion can be achieved through alternative models beyond retail CBDCs
- Shapes expectations for CBDC development trajectory globally with implications for other regions
Cross River Bank has unveiled a new platform enabling unified stablecoin and fiat payments, designed to power the future of on-chain finance. Leveraging the bank’s real-time core system (COS), this launch brings together traditional and blockchain-based value transfers into a single, seamless system with bank-grade compliance. The platform aims to eliminate operational inefficiencies and the need for pre-funding or managing multiple ledgers, providing fintechs, enterprises, and crypto-native companies compliant infrastructure for network settlement, payouts, on/off ramps, and treasury management.Initially available to selected partners, the service underscores Cross River’s commitment to bridging financial innovation with regulatory rigor and paves the way for expanded future use cases in digital assets and blockchain-based finance.
Key Takeaways:
- Platform unifies stablecoin and fiat transactions in one system.
- Reduces operational drag and eliminates need to pre-fund or rebuild ledgers.
- Enables compliant network settlement, merchant payouts, and treasury services.
- Designed for fintechs, enterprises, and crypto-native firms.
- Launch marks milestone as stablecoin transaction volumes exceed $20T annually.
Why It Matters:
- Signals growing mainstream adoption of on-chain financial infrastructure.
- Lowers operational and regulatory barriers for entry into stablecoin payments.
- Supports faster, programmable, and more transparent money movement.
- Highlights role of regulated banks in shaping the future of digital asset ecosystems.
- Paves the way for broader blockchain and digital asset use cases in traditional finance.
Swift announced that ISO 20022 has become the mandatory standard for cross-border payments globally, marking a historic milestone on November 22, 2025. The transition ended the coexistence period with the legacy MT format that began in March 2023. ISO 20022 enables richer, more structured payments data that supports the G20’s goals for international payments. The new standard allows financial institutions to boost operational efficiency, improve compliance, and enhance customer insights. Swift emphasized that ISO 20022 provides a foundation for digital transformation and the integration of tokenized value, creating opportunities for faster, more data-driven payments while enabling blockchain-based infrastructure development for future interoperability between traditional finance and decentralized finance.
Key Takeaways:
- ISO 20022 is now mandatory for all cross-border payments, ending MT format coexistence as of November 22, 2025
- The standard enables richer, structured payments data supporting G20 international payments objectives
- Swift will develop a blockchain-based shared ledger enabling tokenized value movement and TradFi-DeFi interoperability
- Automatic conversion services ensure MT format messages are converted to ISO 20022 for continuity
- The initiative represents years of coordinated effort across financial institutions and payment market infrastructures globally
Why It Matters:
- Foundation for Digital Currencies: ISO 20022’s flexible architecture is designed to support CBDCs and tokenized assets, laying groundwork for next-generation payments infrastructure
- Operational Efficiency: The standard enables straight-through processing, reducing manual intervention and settlement times for cross-border transactions
- Regulatory Compliance: Standardized, structured data improves regulatory reporting and risk management capabilities across institutions
- Blockchain Integration: The standard facilitates integration with distributed ledger technology, enabling the future convergence of traditional and decentralized finance
- Global Payment Innovation: Supports faster, more transparent, and inclusive cross-border payments aligned with emerging digital payment trends
The global stablecoin market contracted by $4.54 billion to reach $303 billion in total market capitalization as of November 24, 2025, marking the first monthly decline in over two years and the steepest drop since November 2022 following the FTX collapse. Despite the downturn, stablecoin market dominance increased to 9.99% due to declining cryptocurrency prices. Tether’s USDT remained resilient, reaching $184 billion with its 27th consecutive month of gains and 60.9% market dominance. Conversely, USDC fell 2.71% to $73.5 billion, while Ethena USDe declined 22.5% to $7.39 billion. Trading volumes reached $1.48 trillion but trended below October levels. Notably, Ripple’s RLUSD surpassed $1 billion and euro-pegged stablecoins hit a 3-year high of $638 million, suggesting diversification within the sector despite overall market contraction.
Key Takeaways:
- Stablecoin market fell 1.48% to $303B, the first monthly decline in 26 months and sharpest drop since FTX collapse in November 2022
- USDT dominance reached 60.9% market share with $184B circulation, showing continued centralization around Tether
- USDC declined 2.71% to $73.5B while Ethena USDe dropped 22.5% to $7.39B, indicating volatility in alternative stablecoins
- Trading volumes of $1.48T tracked below October levels amid broader market liquidity outflows
- Ripple’s RLUSD reached $1B and euro-pegged stablecoins hit 3-year highs, suggesting emerging market diversification
Why It Matters:
- Market Consolidation Signal: The decline signals potential market maturation and consolidation around dominant players like Tether, raising systemic risk concerns
- Regulatory Pressure: Market contraction may reflect ongoing regulatory scrutiny and S&P’s recent downgrade of Tether, potentially affecting investor confidence
- Alternative Stablecoin Opportunities: Growth in non-USD stablecoins (EUR pegs, RLUSD) demonstrates demand for diversified stablecoin options and cross-border payment solutions
- Crypto Market Health Indicator: Increased stablecoin dominance (9.99%) despite market decline indicates institutional demand for stable assets during crypto volatility
- Trading Activity Resilience: Despite market cap contraction, $1.48T trading volume maintains significant payment rails for digital transactions
The UK Financial Conduct Authority (FCA) has admitted RegTech platform Eunice into its Regulatory Sandbox to pilot an industry-designed framework for enhancing transparency across Britain’s digital asset markets. The initiative brings together major exchanges including Coinbase, Crypto.com, and Kraken to develop standardized disclosure templates for cryptocurrency assets. This represents the latest development in the UK’s accelerating regulatory modernization aimed at addressing industry complaints regarding stringent oversight. The FCA’s broader cryptocurrency roadmap outlines a series of policy releases addressing stablecoins, market misconduct, trading platforms, intermediaries, lending, and staking activities. Colin Payne, head of innovation at the FCA, emphasized the regulator’s commitment to fostering beneficial market innovations through the Regulatory Sandbox program.
Key Takeaways:
- FCA admits Eunice RegTech platform into Regulatory Sandbox to develop standardized disclosure templates for digital asset transparency
- Major crypto exchanges (Coinbase, Crypto.com, Kraken) collaborate on industry-led framework for investor protection and market transparency
- UK regulatory modernization demonstrates shift toward innovation-friendly oversight while maintaining investor protections
- FCA roadmap covers stablecoins, market misconduct, trading platforms, intermediaries, lending, and staking, comprehensive regulatory coverage
- Regulatory Sandbox approach enables testing of innovative solutions before full implementation, reducing deployment risks
Why It Matters:
- Regulatory Framework Clarity: Industry-led transparency initiatives reduce regulatory uncertainty and enable consistent disclosure standards across platforms
- Investor Protection Evolution: Standardized disclosure templates align with traditional securities markets practices, elevating crypto market maturity
- Competitive Regulatory Positioning: UK’s innovation-friendly sandbox approach positions the jurisdiction as attractive for fintech and crypto innovation
- Global Precedent Setting: UK’s framework could influence regulatory approaches in other jurisdictions seeking balanced crypto oversight
- Market Integrity Enhancement: Standardized disclosures enable better risk assessment and reduce information asymmetries between exchanges and consumers
Visa announced a landmark expansion of its stablecoin payment capabilities, partnering with cryptocurrency infrastructure firm Aquanow to bring digital currency settlements to Central and Eastern Europe, the Middle East, and Africa (CEMEA). The partnership marks Visa’s most significant expansion of digital currency services since beginning stablecoin settlement testing in 2023. Banks and payment companies across CEMEA can now settle transactions using USD Coin (USDC) instead of traditional wire transfers that take five to seven business days. The system operates 24/7, enabling instant settlement at near-zero cost through blockchain infrastructure. Visa’s digital currency platform has already achieved a $2.5 billion annualized run rate in monthly volumes, demonstrating rapidly growing adoption of stablecoin payment infrastructure among financial institutions.
Key Takeaways:
- Visa’s CEMEA expansion represents its largest digital currency service rollout since 2023 testing began
- Banks and payment processors can now settle transactions using USDC instantly, eliminating multi-day wire transfer delays
The platform operates continuously (24/7), unlike traditional banking systems that halt on weekends and holidays
Visa’s digital currency platform currently processes $2.5 billion in annualized monthly volumes
Visa now supports settlement in over 25 currencies with multiple stablecoins (USDC, PayPal USD, EURC) and blockchain networks (Ethereum, Stellar, Avalanche)
Why It Matters:
- Cross-border payment efficiency: Stablecoin settlements reduce transaction costs from $15-50 per international wire transfer to near-zero, eliminating delays that typically span several business days
- Financial infrastructure transformation: This demonstrates that traditional finance leaders are treating stablecoins as critical operational infrastructure rather than experimental technology
- Regulatory confidence: The expansion occurs within established regulatory frameworks (MiCA in Europe, GENIUS Act in US), signaling that stablecoin infrastructure is becoming institutionalized
- Competitive acceleration: The market faces increasing competition from Mastercard and fintech startups building similar capabilities, driving rapid innovation
- Market scale validation: Stablecoin transaction volumes have reached record levels, now processing more money than some traditional payment networks globally
The UK’s Financial Conduct Authority (FCA) announced the launch of a stablecoin-specific cohort within its Regulatory Sandbox, offering firms a unique opportunity to test stablecoin products and services under the UK’s evolving regulatory regime. FCA executive director David Geale delivered remarks emphasizing the regulator’s commitment to creating a “trusted, competitive, and innovative cryptoasset and stablecoin market.” The FCA has already accepted its first participant, a major firm preparing to test a GBP stablecoin for payments in what the FCA describes as a “world first.” Applications for the sandbox cohort opened immediately and run until January 18, 2026. Additionally, the FCA announced in-person stablecoin policy sprints scheduled for March 2026 to examine retail and wholesale use cases. The FCA is working in coordination with the Bank of England on systemic payments using stablecoins.
Key Takeaways:
- FCA launched a stablecoin-specific Regulatory Sandbox cohort designed for testing innovative stablecoin products under UK rules
- Applications opened immediately and remain open until January 18, 2026, with first participant already accepted
- The FCA’s first accepted participant is developing a GBP stablecoin for payments, described as a regulatory “world first”
- March 2026 will host in-person stablecoin policy sprints examining both retail and wholesale use cases for digital currencies
- The FCA is implementing operational resilience frameworks for cryptoasset firms similar to banking standards
Why It Matters:
- Regulatory sandbox advantage: The UK stablecoin sandbox provides regulatory certainty and support for innovation, potentially positioning UK firms ahead of competitors in other jurisdictions
- GBP stablecoin development: A major UK firm testing GBP stablecoins signals serious institutional commitment to pound-denominated digital currency infrastructure
- Comparative regulatory clarity: The FCA’s coordinated approach with the Bank of England on payments creates a more comprehensive regulatory framework than competitors like the US or EU
- International coordination: The FCA’s participation in the Transatlantic Taskforce for Markets of the Future and leadership roles in IOSCO and FSB indicate the UK’s positioning in global digital asset standards
- Policy-making innovation: The use of regulatory sandboxes combined with policy sprints demonstrates agile policymaking that incorporates industry feedback before finalizing regulations
U.S. Bank, the nation’s fifth-largest commercial bank, announced it is testing the issuance of bank-grade stablecoins on the Stellar blockchain network in partnership with PwC and the Stellar Development Foundation (SDF). The pilot explores whether traditional banks can safely issue programmable money on a public blockchain while maintaining regulatory and compliance requirements. U.S. Bank’s digital asset head, Mike Villano, highlighted Stellar’s built-in technical features, including asset freezing and transaction reversal capabilities, as critical for meeting Know-Your-Customer (KYC) and transaction reversibility requirements. The initiative explores how traditional banking institutions can leverage public blockchain infrastructure for mainstream stablecoin issuance while preserving compliance and risk management standards.
Key Takeaways:
- U.S. Bank is testing custom stablecoin issuance specifically on Stellar’s public blockchain network with PwC and SDF
- Stellar’s built-in transaction reversal and asset freezing features address critical regulatory compliance requirements (KYC, reversibility)
- The pilot demonstrates a major U.S. commercial bank’s commitment to exploring public blockchain infrastructure for stablecoins
- Cross-border stablecoin payments could reach $1 trillion in annual volume by decade’s end, according to Keyrock projections
- The initiative positions U.S. Bank as an early institutional adopter of blockchain-based stablecoin infrastructure
Why It Matters:
- Traditional banking validation: A top-5 U.S. commercial bank testing public blockchain stablecoin issuance signals institutional acceptance of blockchain infrastructure for regulated financial services
- Regulatory feature engineering: Stellar’s native reversibility and freezing capabilities demonstrate how blockchain design can embed regulatory compliance directly into smart contracts
- Competitive positioning: U.S. Bank’s move positions it ahead of peers exploring stablecoin capabilities, gaining first-mover advantages in bank-issued digital currency infrastructure
- Regulatory pathway: The collaboration with PwC and SDF shows how traditional banks can structure compliant blockchain implementations without custom infrastructure
- Market scale opportunity: Projected $1 trillion in cross-border stablecoin volume by 2030 demonstrates the commercial opportunity driving major institutional adoption
The South African Reserve Bank (SARB) published its position paper on retail central bank digital currency (CBDC) implementation, concluding there is no compelling immediate need for a retail CBDC in South Africa. The SARB’s research determined that while a retail CBDC is technically feasible and could align with regulatory objectives, the analysis does not demonstrate strong immediate necessity. Instead, the SARB prioritizes ongoing initiatives like the Payment Ecosystem Modernization Programme and expanding non-bank participation in the national payment system. However, the SARB acknowledged potential long-term value in retail CBDC to safeguard public access to central bank money. The bank announced it will pivot toward exploring wholesale CBDC applications in its next phase, reflecting global momentum around wholesale implementations.
Key Takeaways:
- SARB concluded retail CBDC is technically feasible but lacks compelling immediate implementation justification
- The bank prioritizes Payment Ecosystem Modernization Programme and non-bank payment system participation in the short-to-medium term
- SARB will pivot toward wholesale CBDC exploration, recognizing global momentum in institutional digital currency applications
- Physical cash remains significant in South Africa, particularly for underbanked populations facing infrastructure and cost barriers
- The decision balances innovation with practical considerations around existing payment modernization efforts
Why It Matters:
- CBDC implementation realism: SARB’s decision reflects growing recognition that retail CBDC isn’t universally necessary, other payment modernization approaches may be more immediately valuable
- Wholesale focus trend: The shift toward wholesale CBDC exploration aligns with global central bank priorities around financial market infrastructure rather than consumer payments
- Financial inclusion complexity: SARB’s emphasis on existing barriers (infrastructure, costs, power issues) highlights why digital currency alone doesn’t solve financial inclusion without addressing underlying infrastructure gaps
- Developmental pragmatism: The decision demonstrates that developing nations are taking measured, evidence-based approaches to CBDC rather than pursuing implementation for its own sake
- Competitive payment modernization: SARB’s focus on PayShap (local instant payment system) and open banking suggests African central banks view interoperable payment systems as more immediately valuable than CBDCs
S&P Global Ratings downgraded the peg‑stability assessment of Tether’s USDT to its lowest tier, “5 (weak),” from “4 (constrained),” citing rising exposure to higher‑risk assets and limited transparency in reserve disclosures. S&P’s research notes that Bitcoin now accounts for about 5.6% of USDT’s reserves, exceeding the 3.9% over‑collateralisation margin, meaning a sharp drop in Bitcoin, alongside other risky assets such as gold, secured loans, corporate bonds and other investments, could leave USDT under‑collateralised. Analysts Rebecca Mun and Mohamed Damak also flagged minimal information about the creditworthiness of Tether’s custodians and banking partners, even as USDT’s circulation climbed to roughly US$184 billion in November. S&P nevertheless acknowledged USDT has historically maintained its dollar peg.
Key takeaways:
- S&P cuts USDT’s stability score to “5 (weak),” its lowest peg‑stability rating.
- High‑risk assets (Bitcoin, gold, loans, corporate bonds) now meaningfully affect reserve robustness.
- Bitcoin’s 5.6% share of reserves exceeds USDT’s reported 3.9% over‑collateralisation buffer.
- Tether’s circulating supply rose to about US$184.4 billion in November despite these concerns.
Why it matters:
- Underscores that reserve composition and disclosure, not just headline backing, drive systemic risk.
- Provides regulators and institutions with an independent risk signal on the world’s largest stablecoin.
- Highlights potential under‑collateralisation risk in a severe crypto downturn.
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