EU may consolidate crypto regulations, IMF warns of stablecoin risk: Global Express

Aaron Wood 1 minute ago EU may consolidate crypto regulations, IMF warns of stablecoin risk: Global Express The IMF and South Africa’s central bank are still concerned about stablecoins, while in the US, spot crypto products can now be traded on futures markets. Listen 0:00 Analysis COINTELEGRAPH IN YOUR SOCIAL FEED European tech regulators have fined social media platform X 120 million euros ($140 million) for breaking EU rules pertaining to online content. The fine follows a two-year investigation under the Digital Services Act (DSA), which reportedly found that X was not doing enough to tackle illegal and harmful material. Regulators also said that the blue check marks on Elon Musk’s platform were deceiving. They did not follow industry decisions and negatively impacted users’ ability to make informed decisions about the authenticity of an account. The fine is part of a wider crackdown on Big Tech companies, particularly social media. TikTok reported it had avoided a fine by making concessions. The actions against X are bound to create tension with the US. Vice President JD Vance said that EU regulators shouldn’t be “attacking” American companies. Source: JD Vance The DSA will also apply to crypto platforms, DeFi frontends and NFT marketplaces if they grow to a sufficiently large size. It can influence how these platforms handle ads, user-directed content and market financial instruments. EU banks launch euro-stablecoin firm as EU considers ESMA crypto oversight A group of 10 European banks, including institutional heavyweights such as BNP Paribas, is planning to launch a stablecoin backed by the euro by the second half of 2026. BNP Paribas partnered with Danish Danske Bank, the Netherlands’ ING, Austria’s Raiffeisen Bank International and others to create and incorporate the project as Qivalis. The company will be based in Amsterdam. Qivalis CEO Jan-Oliver Sell said that stablecoins provide both convenience and monetary autonomy “in the digital age.” He said it will give “new opportunities for European companies and consumers to interact with on-chain payments and digital asset markets in their own currency.” The new project was announced days before the European Commission proposed expanding the powers of the EU’s key financial regulator, the European Securities and Markets Authority (ESMA). The proposal , released Thursday, would transfer supervision “over significant market infrastructures such as certain trading venues, Central Counterparties (CCPs), CSDs, and all Crypto-Asset Service Providers (CASPs)” to the ESMA. The move is part of a broader effort to streamline European market regulation. Three countries — France, Italy and Austria — have requested that the ESMA take over crypto regulations. This followed concerns that there was uneven enforcement of Markets in Crypto-Assets (MiCA) standards across member states. Related: What is Markets in Crypto-Assets (MiCA)? Spot crypto assets to begin trading on futures market, CFTC says In the United States, the Commodity Futures Trading Commission (CFTC) has approved spot cryptocurrency products to trade on futures markets. Acting Chair Caroline Pham said that the move brings these products onshore to “safe U.S. markets.” She said the approval followed recommendations from the White House’s Working Group on Digital Asset Markets and engagement with the Securities and Exchange Commission (SEC). Earlier this year, the SEC and CFTC established the “Crypto Sprint” initiative to share recommendations and consult on best practices. Source: Acting CFTC Chair Caroline Pham Pham became acting chair at the beginning of the year. She is expected to step down when the Trump administration’s nominee, Michael Selig, is approved by Congress. South Africa flags crypto risks; new rules in the works The South African Reserve Bank, the country’s central bank, issued a warning on Nov. 25 about the perceived risks associated with stablecoins and cryptocurrencies. These include a lack of comprehensive regulations. The bank was concerned that the global and borderless nature of cryptocurrencies would make them ideal for skirting financial regulations. South Africa is second on the continent for value received in crypto. Source: Chainalysis Herco Steyn, the bank’s lead macroprudential specialist, reportedly said the risk stemmed from “the lack of a complementary and full regulatory framework, which is not possible at the moment.” In 2023, he wrote , “Regulatory influence over stablecoin issuers – whether domiciled domestically or abroad – may result in spillovers from the crypto asset ecosystem to the traditional financial system, particularly if South African regulatory authorities are unable to impose prudential requirements on stablecoin issuers.” To address this, the reserve bank is reportedly working on new rules with the National Treasury to monitor cross-border crypto transactions and change exchange control laws so they fall under regulatory scrutiny. IMF warns stablecoins could upend fragile financial systems On Thursday, the International Monetary Fund (IMF) published a report on stablecoins outlining a number of risks, including: Volatility in value and runs Disintermediation of banks Interconnection with the financial system Currency substitution. It said that the “use of foreign currency-denominated stablecoins, especially in cross-border contexts, could lead to currency substitution and potentially undermine monetary sovereignty, particularly in the presence of unhosted wallets.” The IMF also noted that many major stablecoin issuers don’t provide or offer any redemption rights for holders. “Uncertainty of treatment in case of insolvency of stablecoin issuer may also accelerate runs,” it said. Runs would also create first-mover advantages when there is a crisis of confidence, which could result in investors selling their holdings at a significant discount. The IMF did acknowledge possible benefits of stablecoins, including faster transactions compared to bank transfers, particularly in the context of cross-border transactions and remittances. They can also facilitate digital payment in remote areas and reduce counterparty risk when integrated with smart contracts. Magazine: Indian investors look beyond Bitcoin, Japan to soften crypto tax: Asia Express # Twitter # South Africa # Adoption # Euro # United States # European Union # Regulation # Features Add reaction