The Payments Newsletter including Digital Assets and Blockchain, January 2025

Chapter 1 - Regulatory Developments: Payments

United Kingdom: PSR publishes final report and consultation on cross-border interchange fees

On 13 December 2024, the Payment Systems Regulator (PSR) published its final market report on UK/EEA cross-border interchange fees and launched a consultation on remedies in connection to the report.

From January 2021, the EU Interchange Fee Regulation (IFR) ceased to apply to cross-border transactions between the UK and EEA countries. As such, Visa and Mastercard increased their consumer debit card fees from 0.2% to 1.15% and consumer credit card fees from 0.3% to 1.5% for card-not-present transactions. In response, the PSR launched a market review in October 2022 to understand the factors leading to the increase in the interchange fees, and judge how effectively the market as a whole is working.

In the final report, the PSR reiterates its interim position that there is insufficient competition in the card scheme market to drive down the fees set by Visa and Mastercard. The PSR estimates that the increased fees cost UK businesses £150 - 200 million in 2022 and 2023, with 95% of the increased cost of the interchange fee being passed through to merchants. The PSR takes the view that merchants and customers have seen no benefit from the increase, so this is harming market users and indicates a market operating in a suboptimal manner.

The PSR considers that the only effective remedy is a price cap. Whilst this would not solve the issue of the market operating poorly, it would protect service users. A two-stage approach is suggested, with an initial cap at the EU IFR level, and a second cap being introduced once further research has been conducted into the methodology and level of the cap. The consultation on the proposed remedy is open until 7 February 2025.

For more on this development, see our article.

United Kingdom: Bank of England speech provides updates on future roadmap for RTGS service

On 16 December 2024, the Bank of England (BoE) published a speech by Victoria Cleland, Executive Director for Banking, Payments and Innovation, providing an update on the future roadmap for the Real-Time Gross Settlement (RTGS) service.

The speech outlined the BoE's intention for the renewed RTGS system to increase resilience, foster innovation and promote competition. User functionality is central to this and will be improved through introducing APIs, facilitating direct access for a wider group of market participants, and having longer settlement hours. Cleland highlights the importance of central bank money due to its status as the lowest risk, most liquid and highest security asset in the UK economy. Cleland notes that the BoE wants "to ensure that there is not a significant shift away from settlement in central bank money".

The BoE is taking an iterative approach to payments innovation. The renewed RTGS system will be modular to allow elements to be updated independently of the whole system, facilitating smaller iterative changes. This means that, once the new core ledger and settlement engine is introduced in 2025, enhancements such as synchronised payments will be more smoothly introduced.

Close collaboration with industry is welcomed, and three instances from 2024 are highlighted:

1. Reviewing whether wider access to RTGS could be facilitated – removing excess tiering and the need for intermediaries will facilitate cheaper and faster payments;
2. Reviewing the case for extending RTGS settlement hours – feedback from the previous discussion paper has informed the BoE's intention to gradually extend settlement hours to "near-24x7 operation around the turn of the decade"; and
3. Fostering wholesale settlement innovation through "synchronisation" - this will enable co-ordination between accounts within RTGS, enabling transfers of one type of asset to be settled in another.

United Kingdom: FCA statement on planned revision of MoU with BoE, PRA and PSR in light of National Payments Vision

On 20 December 2024, the FCA published a statement announcing that it, the Bank of England (BoE), the PRA, and the Payment Systems Regulator (PSR) have committed to revise their Memorandum of Understanding (MoU) - which sets out the high-level framework that they use to cooperate with one another in relation to payment systems in the UK - by Q2 2025 in line with the Government’s National Payments Vision (NPV).

For more on the NPV, take a look at our article here.

United Kingdom: PSR publishes Strategy update

On 16 January 2025, the Payment Systems Regulator (PSR) published its commitments for the next two years following a mid-term review of its five-year Strategy.

The PSR states that its review reflects extensive engagement with stakeholders, the trends it is seeing in payments – both at home and abroad, the Government’s growth mission, and the impact of the National Payments Vision (NPV). It has also published a related press release and a stakeholder engagement factsheet summarising stakeholders’s views and how it responded to feedback in updating its Strategy.

Having reflected on the above developments, the PSR will focus on the following three core commitments for the remainder of the Strategy term:

• Complete the important work underway – protecting consumers and supporting competition: The PSR will continue to embed its APP fraud reimbursement requirements, including commissioning an independently led review, and deliver the outcomes from its card market reviews (see the separate item in this Newsletter on the PSR’s final report and consultation on cross-border interchange fees). It will work closely with the FCA to enable it to take forward work on the overall framework for commercial Open Banking payments, with the PSR focusing on the initial phase of Variable Recurring Payments (VRPs), which offers consumers more choice and control when making payments.
• Drive forward, with the Bank of England, work to upgrade the Faster Payments system, and reform of Pay.UK, as well as assess long term retail infrastructure needs:The PSR describes this as critical to providing a sound foundation for future innovation and competition in payments.
• Sharpen its focus on competition and innovation in payment systems, supporting economic growth and enabling the ecosystem of the future: The PSR plans to build out its innovation capability, focusing on removing unnecessary barriers to payments innovation and helping to create the conditions for innovation in payment systems to thrive. It will also ensure that as it takes action, it considers how that supports economic growth and will play its role in supporting the Government’s growth mission.

The PSR emphasises that continued collaboration and engagement between the government, regulators and the private sector is key to the success of UK payments. It welcomes contact from any stakeholders wanting to discuss any aspect of the Strategy update.

Global: BIS Innovation Hub work programme for 2025-26

On 14 January 2025, the Bank for International Settlements (BIS) updated its Innovation Hub webpage to set out the Innovation Hub's work programme for 2025-26. Items of interest from the work programme include:

• exploring synergies between different projects and themes, focusing on developing solutions to support central banks in their core responsibilities of the provision of money, monetary policy, payments infrastructure, financial stability, and regulation and supervision;
• further developing ongoing projects, such as Project Agora, in which partners from seven central banks and over 40 private sector financial institutions are exploring how tokenisation can enhance wholesale cross-border payments; and
• exploring the potential of central bank community-driven ecosystems in the creation of code and other solutions that can add value to central banking.

BIS comments that implementation of any project is ultimately a decision for partner central banks. In 2024, the Innovation Hub announced that two significant projects developed with central banks would be handed over to those partners.

There is a separate webpage providing details of the Innovation Hub's ongoing, planned and concluded projects.

India: Reserve Bank of India announces implementation of beneficiary name verification facility for RTGS and NEFT systems

On 30 December 2024, the Reserve Bank of India (RBI) announced that all banks who are direct members or sub members of the Real-Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) systems are advised to offer a beneficiary name verification facility no later than April 1, 2025. This initiative aims to enhance the security of digital fund transfers, reduce errors, and prevent fraud. The National Payments Corporation of India (NPCI) will develop the necessary infrastructure for this feature.

United Kingdom: Bank of England outlines future priorities for supervising FMIs in annual report 2024

On 18 December 2024, the Bank of England (BoE) published its annual report on its supervision of financial market infrastructures (FMIs), which includes an outline of future priorities.

The BoE's main objectives for FMI supervision are to establish a rulebook for FMIs, and promote effective internal co-operation.

Specific areas of focus are:

• Ensuring financial stability through financially resilient FMIs. This will include undertaking a range of supervisory reviews, technical risk reviews, stress tests, and third-party reviews across the FMI sector. The BoE will also further enhance its use of data to support identification of risks to FMIs;
• Ensuring FMI services are operationally resilient and not a major financial stability risk in the event of disruption. The BoE will work with FMIs to ensure internal changes are completed effectively and efficiently. The BoE will also continue working with other regulators to roll out and embed the oversight of critical third parties (CTPs) once HM Treasury designates the first CTPs. This power was granted to HM Treasury under FSMA 2023 and the first designations are expected in H2 2025;
• Enabling safe and resilient innovation in payments, settlement and clearing. The BoE will work with HM Treasury to deliver the outcomes set out in the National Payments Vision; and
• Implementing and embedding its new responsibilities in a proportionate and robust way. The BoE will develop and implement the rulebook for FMIs. The priority will be to repeal and replace UK EMIR for central counterparties. The BoE expects to consult on the first phase of the rulebook in 2025. It will also publish final rules and guidance on a set of Fundamental Rules for FMIs, following its November 2024 consultation. We reported on the BoE’s consultation and its publication of an updated version of its approach to FMI supervision in our December 2024 Newsletter. You can read more about these developments in our articles here (Fundamental Rules for FMIs consultation) and here (approach to FMI supervision).

United States: CFPB looks at digital payment privacy and consumer protections

On 10 January 2025, the Consumer Financial Protection Bureau (CFPB) announced that it is seeking input, via a Request for Information, on strengthening data privacy protections and preventing harmful surveillance in digital payments, especially those offered through Big Tech. The CFPB warn that digital payment mechanisms collect and use data in excess of what is needed for the transaction, and this data could be used for personalised pricing where a price is based on factors specific to the consumer.

The CFPB seeks input on the effectiveness of existing regulations and how else to address intrusive data collection and personalised pricing. The CFPB also wants to better understand how companies that offer consumer financial products or services collect, use, share and protect consumers’ personal financial data, including data harvested from consumer payments.

Additionally, it seeks input on a proposed interpretive rule outlining how the Electronic Fund Transfer Act, which provides consumers with protections against fraud and errors, applies to new types of digital payment systems.

Comments on the Request for Information must be received by 11 April 2025. Comments on the proposed interpretive rule must be received by 31 March 2025.

United States: CFPB approves FDX application to issue standards for open banking

On 8 January 2025, the Consumer Financial Protection Bureau (CFPB) announced that the Financial Data Exchange, Inc. (FDX) has been approved as a standard setting body under the CFPB’s Personal Financial Data Rights rule. The rule was released in October 2024 and requires financial institutions, credit card issuers, and other financial providers to unlock an individual’s personal financial data and transfer it to another provider at the consumer’s request for free. In June 2024, the CFPB outlined the key qualifications required for approval as a standard setting body under the rule. This is the first order of recognition issued under the rule, and recognises FDX for five years.

FDX is a standard setting organisation with over 200 member organisations including data providers, data aggregators, data recipients, service providers to open banking participants, depository and non-depository commercial entities, trade and industry organisations and other non-commercial entities such as consumer groups.

New Zealand: Commerce Commission publishes draft decision to reduce merchant service fees for card payments

On 18 December 2024, the Commerce Commission issued its draft decision to reduce fees paid by New Zealand businesses for accepting Visa and Mastercard payments. The average merchant service fee for small businesses is around 1.2% to 1.5%. These fees are passed on to consumers through increasing the cost of goods and services, and imposing surcharges.

In an attempt to reduce costs for consumers, the Commission seeks to reduce fees charged to businesses by $260 million a year, and set the expectation that payment providers and businesses should pass the savings to consumers rather than keeping hold of the difference. The Commission expects that if the decision is implemented, consumers would benefit from lower surcharges of around 0.7% to 1%, or lower prices for goods and services.

The Commission is seeking feedback on its draft decision by 5pm on 18 February 2025.

European Union: European Court of Auditors report on EU digital payments finds price interventions and account data sharing are areas for improvement

On 9 January 2025, the European Court of Auditors published its ‘Special report 01/2025: Digital payments in the EU – Progress towards making them safer, faster, and less expensive, despite remaining gaps’. The report covers the period from 2013 to 2023 and focuses on policies and regulation in the area of payments in the European Union (EU).

The report found that, overall, the EU’s approach to digital payments has contributed to making them safer, faster, and less expensive for users. However, it identified two key areas for improvement in the EU’s regulatory framework, namely:

• the criteria for assessing the adequacy of price interventions are unclear and there are no periodic reviews; and
• there are gaps in the legal framework regarding account data sharing under open banking.

In light of the above, the report made five recommendations for further action to the European Commission. In outline, these recommendations are:

1. To set out the criteria for price interventions in the area of digital payments and carry out periodic reviews;
2. To develop and implement a data monitoring strategy in the area of digital payments;
3. To propose performance indicators and set targets for digital payments;
4. To fight discrimination based on payment account location with better enforcement rules and analyse virtual payment accounts; and
5. To strengthen efforts to achieve a level playing field in authorisation and supervision.

Global: FSB publishes final recommendations on data flow, regulation and supervision in cross-border payments

On 12 December 2024, the Financial Stability Board (FSB) published the following documents containing recommendations aimed at advancing priority actions under the G20 roadmap for enhancing cross-border payments:

• Final report containing final recommendations (following its July 2024 consultation) to promote alignment and interoperability across data frameworks related to cross-border payments. The recommendations aim to strengthen consistency in the regulation and supervision of banks and non-banks in their provision of cross-border payment services in a way that is proportionate to the risks associated with these activities. The FSB has also published the consultation responses received and an overview of those responses. The FSB is establishing a forum on cross-border payments data to progress the recommendations and identify emerging issues to be addressed. The forum will comprise public sector stakeholders in the fields of payments, anti-money laundering (AML) and counter-terrorist financing (CTF), sanctions, and data privacy and protection. The forum will also establish a private sector advisory group.
• Final report containing final recommendations (following its July 2024 consultation) for regulating and supervising bank and non-bank payment service providers (PSPs) offering cross-border payment services. The recommendations aim to mitigate unintended frictions that may pose significant challenges to improving the cost, speed, transparency and accessibility of cross-border payments. The FSB has also published the consultation responses received and an overview of those responses.

The FSB states in a related press release that as part of its work in this area and to enhance private sector engagement, it is inviting market stakeholders in cross-border payments to join its taskforce on legal, regulatory and supervisory matters (LRS taskforce). Nominations of individuals to join the LRS taskforce should be emailed to LRS@fsb.org with “LRS taskforce” in the subject line by 31 January 2025.

United Kingdom: Banking Act 2009 (Wholesale Cash Oversight Fees) Regulations 2024 published

The Banking Act 2009 (Wholesale Cash Oversight Fees) Regulations 2024 (SI 2024/1344) were made on 16 December 2024 and laid before Parliament on 17 December 2024.

The Regulations set out a scale of fees that the Bank of England (BoE) may charge to certain entities that operate in the wholesale cash distribution (WCD) market. The Regulations apply only to persons recognised by HM Treasury (HMT) under Part 5A of the Banking Act 2009 as performing a relevant function in relation to a WCD activity and having market significance (recognised persons). In any one calendar year, the BoE may charge a recognised person an annual oversight fee of up to £400,000 and a special projects fee up to a maximum of £150,000. HMT has not yet made any recognition orders relating to Part 5A.

The Regulations do not apply to persons that are recognised by HMT as having systemic significance for the WCD market. HMT does not expect to recognise any person in the near term as having systemic significance.

The Regulations come into force on 24 January 2025.

Chapter 2 - Regulatory Developments: Digital Assets

European Union: MiCA updates

On 13 December 2024, the European Commission adopted a Delegated Regulation containing regulatory technical standards (RTS) specifying the adjustment of own funds requirement and minimum features of stress testing programmes of issuers of asset-referenced tokens or of e-money tokens under the EU Markets in Cryptoasset Regulation (MiCA). The Council of the EU and the European Parliament will now scrutinise the Delegated Regulation. If neither objects, the Regulation will be published in the Official Journal of the EU and enter into force 20 days after publication.

On 16 December, the European Commission adopted the following Delegated Regulations supplementing MiCA:

• A Commission Delegated Regulation laying down RTS specifying the data necessary for the classification of cryptoasset white papers and the practical arrangements to ensure that such data is machine-readable, together with an Annex;
• A Commission Delegated Regulation laying down RTS specifying the minimum content of the governance arrangements on the remuneration policy of issuers of significant asset-referenced or e-money tokens; and
• A Commission Delegated Regulation laying down RTS specifying the procedure and timeframe for an issuer of asset-referenced tokens (ARTs) or of e-money tokens (EMTs) to adjust the amount of its own funds.

The next step is for the Delegated Regulations to be published in the Official Journal of the EU. They will come into force 20 days after publication.

On 17 December, ESMA published a short statement in relation to the non-unified approach to transitional periods by member states in relation to MiCA. The regime provides additional time to transition to the MiCA regime for cryptoasset service providers (CASPs) that offered their services prior to 30 December 2024. ESMA provided a list of grandfathering periods for each member state on 11 December.

Also on 17 December, ESMA published a number of policy documents in relation to MiCA including:

• Regulatory technical standards on market abuse, specifying systems and procedures to prevent and detect market abuse in cryptoassets, the template for reporting suspected market abuse, and coordination procedures between competent authorities for detection and sanctioning of cross-border market abuse situations;
• Guidelines on reverse solicitation that confirm that the exemption should be understood as very narrowly framed and regarded as the exception, not to be used to circumvent MiCA requirements. The exemption only applies to cases where the client is the exclusive initiator of the service. Guidance is provided on the limited circumstances where this may be the case;
• Guidelines on suitability that specify how CASPs providing advice on cryptoassets or portfolio management of cryptoassets have to give suitable recommendations to their clients or make suitable investment decisions on their behalf. This aligns with the MiFID II requirements so CASPS providing advice under both MiFID II and MiCA are subject to similar requirements;
• Guidelines on cryptoasset transfer services that aim to ensure investor protection for clients transferring cryptoassets, by specifying policies and procedures that CASPs should have in place;
• Guidelines on qualification of cryptoassets as financial instruments, providing conditions and criteria for the qualification of cryptoassets as financial instruments. The guidelines aim to provide more clarity about the scope of application of MiCA versus other sectoral regulatory frameworks such as MiFID II; and
• Guidelines on the maintenance of systems and security access protocols that apply to offerors and persons seeking admission to trading who are not subject to the same operational resilience standards under MiCA and DORA as CASPs or issuers. The guidelines provide for a streamlined set of principles for these entities to manage their ICT risks.

In addition, on 17 December the European Commission adopted a Delegated Regulation relating to RTS specifying the content, methodologies and presentation of information in respect of sustainability indicators concerning the adverse impacts on the climate and other environment-related adverse impacts, which supplements MiCA. The Annex to the Delegated Regulation sets out a template for presenting information on principal adverse impacts on the climate and other environment-related adverse impacts in cryptoasset white papers and on the website of a CASP. The next step is for the Delegated Regulation to be published in the Official Journal of the EU. It will come into force 20 days after publication.

On 18 December, the EBA published its final report on guidelines on templates to assist competent authorities in performing their supervisory duties regarding issuers' compliance under Titles III and IV of MiCA. The guidelines are addressed to competent authorities, issuers of ARTs and issuers of EMTs. They specify common templates and instructions for issuers to provide competent authorities and the EBA with the necessary information to cover identified reporting data gaps. The guidelines also include common templates and instructions that issuers should use to collect the data they need from relevant CASPs, contained in annexes in section 4 of the report:

• Annex I: Templates for issuers of ARTs and EMTs;
• Annex II: Instructions for issuers of ARTs and EMTs;
• Annex III: Templates for CASPs;
• Annex IV: Instructions for CASPs; and
• Annex V: Data point model (DPM) and validation rules.

The EBA has also published a visual explainer providing guidance on which templates should be submitted by the different types of issuers. The EBA states that changes to the draft guidelines were made in the light of the consultation responses received. The guidelines will apply two months after publication on the EBA website of the translations in the EU official languages.

Also on 18 December, the European Commission adopted the following Delegated Regulations supplementing MiCA:

• A Delegated Regulation relating to RTS specifying the detailed content of the information necessary to carry out the assessment of a proposed acquisition of a qualifying holding in an issuer of an ART; and
• A Delegated Regulation relating to RTS specifying the detailed content of information necessary to carry out the assessment of a proposed acquisition of a qualifying holding in a CASP.

The next step is for the Delegated Regulations to be published in the Official Journal of the EU. They will come into force 20 days after publication.

On 30 December 2024, MiCA became fully applicable.

United Kingdom: FCA publishes discussion paper on admissions and disclosures and market abuse regime for cryptoassets

On 16 December 2024, the FCA published a discussion paper (DP24/4) on admissions and disclosures (A&D) and the market abuse regime for cryptoassets (MARC). This is part of a series of publications by the FCA (and the first since the change in government in July 2024) designed to facilitate the development of the UK’s cryptoasset regulatory regime.

For the purposes of the discussion paper, ‘cryptoassets’ refers to spot cryptoassets, such as stablecoins and unbacked cryptoassets (eg Bitcoin and Ether). It does not include those cryptoassets already captured under the existing list of ‘specified investments’ in Part III of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO), such as tokenised financial instruments, or the rights to the same, which includes security tokens.

A&D regime

• The discussion paper outlines the proposed A&D regime, key exemptions (as HM Treasury is expected to introduce legislation that will prohibit public offers of cryptoassets in the UK but which will also include exemptions from the prohibition), and other applicable requirements (eg compliance with Consumer Duty may require disclosures beyond those under the A&D regime).
• The FCA points out that existing regimes, such as the financial promotions regime and Consumer Duty, are broad in scope and interact with elements of the proposed A&D regime. Similarly, the proposed future fiat-referenced stablecoins regime may also include disclosure requirements that intersect with those under the A&D regime. It is evaluating the best approach for handling regulated stablecoins under the future stablecoin regime to avoid duplicative disclosure requirements.

MARC

• As first set out in the government’s February 2023 consultation, MARC will be based on parts of the UK Market Abuse Regulation (UK MAR) tailored for cryptoasset activity. These include prohibitions on: insider dealing; unlawful disclosure of inside information; and market manipulation, including dissemination of false or misleading information. The FCA expects the government to base the definitions of these activities on the definitions used in the existing market abuse regime.
• Elements of the FCA regime would include a requirement that Cryptoasset Trading Platforms (CATPs) implement rigorous systems and controls to prevent, detect, and disrupt market abuse on their platforms. Under this approach, CATPs would be able to choose which controls, systems, and surveillance tools best suit their respective business models. There would be a similar requirement for cryptoasset intermediaries.

The discussion paper closes on 14 March 2025. The FCA will consider the feedback received and conduct further industry engagement to determine its next steps. It will consult via a consultation paper on any of the proposals outlined in the discussion paper if it proposes to adopt them as part of its final rules. The FCA’s crypto roadmap (reported on in our December 2024 Newsletter) states that a related consultation paper is due to be published in Q3 2025.

For more on this development, take a look at our article.

Philippines: SEC publishes draft crytpoassets rules

On 20 December 2024, the Philippines Securities and Exchange Commission (SEC) published a draft version of its “SEC Rules on Crypto-Assets Service Providers (CASP Rules)” for consultation. Cryptocurrency adoption has become particularly popular in the Philippines, perhaps in part due to its young population, with an average age of 25. In light of this, the SEC aims to address risks such as market manipulation and fraud, whilst also bolstering innovation.

The proposed regulations include the following:

• Cryptoassets are categorised as digital value representations utilising distributed ledger technology. The new framework will govern activities such as trading, custody, and public offerings of these assets;
• CASPs are required to register with the SEC and obtain licences, adhering to requirements and standards, including being stock corporations registered with the SEC, having at least four staff members based in the Philippines, meeting minimum capital requirements, demonstrating compliance with CASP guidelines and submitting a complete application for authorisation;
• CASPs intending to offer cryptoassets to the public must submit detailed disclosure documents to the SEC at least 30 days prior to marketing. These documents should include the offeror’s profile, the underlying technology, potential risks, and warnings about possible value loss;
• CASPs must align their systems with the National Cybersecurity Plan and undergo regular audits to ensure resilience against emerging threats; and
• CASPS must also adhere to anti-money laundering laws, insider trading prevention, and anti-market manipulation practices.

The consultation closed on 18 January 2025.

United Kingdom: PRA data request on exposure to cryptoassets including tokenised assets and stablecoins

On 12 December 2024, the PRA published a data request in the form of a questionnaire, and an accompanying press release, on firms’ exposures to tokenised assets, stablecoins and other cryptoassets.

According to the press release, in order to inform the PRA and the Bank of England’s work on cryptoassets, the PRA is gathering information on firms’ current and expected future cryptoasset exposures and their application of the Basel framework for the prudential treatment of cryptoassets.

Firms have until 24 March 2025 to respond.

European Union: EBA report on tokenised deposits

On 12 December 2024, the European Banking Authority (EBA) published a report on tokenised deposits which discusses tokenised deposit projects observed by the EBA, and considerations regarding the appropriate regulatory framework.

Key takeaways include:

• At present, there are few examples of tokenised deposits globally, but nonetheless there is evidence of growing interest among the largest credit institutions in the EEA to engage in the activity of deposit tokenisation in the next two years or more.
• Among the potential benefits of tokenised deposits, the EBA discussed the use of programmability, and facilitation of compliance with AML/CFT requirements.
• Challenges include limitations where the level of technological and financial education of retail users is insufficient, and potential difficulties around regulatory classification, operational risks, liquidity management, and implementation of AML/CTF controls for DLT-based transactions.
• In terms of regulation the report helpfully clarifies that, to the extent a tokenised deposit involves recording the deposit claim on the DLT instead of a traditional ledger, this does not per se alter the fundamental nature of the claim and therefore should qualify as a deposit. Where the meaning of “deposit” under the Deposit Guarantee Schemes Directive (DGSD) is met, the regulatory requirements relating to deposit-taking activity would be relevant (such as in the Capital Requirements Directive and Regulation), as opposed to requirements relating to cryptoassets under the Markets in Crypto-assets Regulation (MiCA). That being said, much of the report concerns the “account-based” model of tokenised deposits (which resemble conventional deposits recorded on traditional bank ledgers) as opposed to “token-based” models, which the EBA notes would require more careful assessment in terms of regulatory classification.

The EBA will continue to monitor this space and promote discussion with competent authorities, as well as engage with industry to identify any need to issue guidance or recommendations. The EBA also notes that, for now, it has not identified a need to amend the DGSD definition of “deposit”.

United Kingdom: Bank of England publishes retail CBDC progress update and design note on blueprint framework

On 14 January 2025, the Bank of England (BoE) published a summary of work over the past year on a digital pound, including how it relates to the evolving payments landscape. The BoE notes that significant progress has been made in the design phase of the digital pound project in the past year.

Alongside the progress update, the BoE has also published a design note outlining its initial thinking on the potential aims, scope and focus areas of a digital pound blueprint. It welcomes feedback on the points raised in the design note, in particular on whether the aspects highlighted are a suitable set of topics for the blueprint. Feedback should be sent via email to CBDC@bankofengland.co.uk.

Next steps will include the following:

• The BoE will start publishing design notes to present its emerging thinking on specific aspects of a digital pound, the first of which is the above note on a blueprint framework.
• The BoE will launch a Digital Pound Lab this year, which will provide a simulated environment to test the potential capabilities of a digital pound, offering critical insights into the feasibility of different use cases.
• The current Engagement Forum and Academic Advisory Group will continue, but the BoE will wind down the Technology Forum. While engagement focused on technology will continue, it will be more direct and detailed, supported by the Digital Pound Lab.
• As part of the National Payments Vision (NPV) (see our related article here), the Payments Vision Delivery Committee is being established to ensure co-ordination between the regulators and provide a mechanism to facilitate prioritisation decisions on payments initiatives. Its work will be informed and supported by the Vision Engagement Group. The design phase of the digital pound will continue alongside the Committee’s work, overseen by the existing joint HM Treasury and Bank of England Digital Pound Taskforce, with input from the Engagement Forum. The BoE points out that as the chairs of the Taskforce are also members of the Payments Vision Delivery Committee, this will ensure coherence across both governance bodies.

The BoE will continue to publish minutes of its industry forums and share relevant research and policy outputs on its digital pound webpage, ensuring that stakeholders remain informed as the project progresses.

El Salvador: Government rolls back its Bitcoin project under IMF agreement

On 18 December 2024, the International Monetary Fund (IMF) published a press release announcing a staff-level agreement on a $1.4 billion Extended Fund Facility (EFF) to support the El Salvador government’s reform agenda regarding fiscal and external sustainability. Part of the work will see El Salvador scale back its Bitcoin project to reduce its risks. These legal reforms will make the acceptance of Bitcoin by the private sector voluntary and confine Bitcoin-related economic activities in the public sector. The government’s participation in the crypto e-wallet will be gradually unwound. Additionally, regulation and supervision of digital assets will be enhanced to safeguard financial stability and consumer and investor protection.

South Korea: FSC to ease institutional crypto trading restrictions

On 9 January 2025, it was reported that South Korea’s financial regulator, the Financial Services Commission (FSC), plans to gradually ease restrictions on institutional crypto trading.

This follows the passing of its Virtual Asset User Protection Act in July 2024 which aimed to curb unfair trading practices on an institutional level. Under this law, banks are instructed to restrict institutional trading. Retail traders can still access the market from regulated local exchanges. The change would mean retracting from this restrictive position in an attempt to align with global regulatory practice.

Chapter 3 - Market Developments

European Union: First crypto platforms approved under Europe’s MiCA regime

On 30 December 2024, it was reported that the Dutch regulator had awarded licences to four digital asset companies under the new EU Markets in Crypto-Assets Regulation (MiCA). These are among the first licences awarded under the new regime. The licence allows Moonpay, BitStaete, FinTech ZBD and Hidden Road to operate across every nation in the EU. The EU set a 30 December 2024 deadline for its member states to implement MiCA.

United Arab Emirates: MANTRA Blockchain to tokenise $1bn of real-world assets for UAE firm DAMAC

On 9 January 2025, it was reported that MANTRA, a blockchain designed for tokenisation of real-world assets, had entered into an agreement with United Arab Emirates (UAE) based property conglomerate DAMAC Group to tokenise at least $1 billion of the firm’s assets to blockchain rails. The deal will allow investors to finance DAMAC’s property portfolio companies spanning various sectors. The asset tokenisation aims to streamline traditional investment processes and increase accessibility for both retail and institutional investors by fractionalising high-value assets.

France: Bybit will stop crypto services for French users by January 2025

On 18 December 2024, it was reported that Bybit, a global crypto exchange, had announced that it will terminate withdrawal and custody services in France. This announcement comes as a response to increased regulatory pressures from French financial authorities. Bybit has advised French users to withdraw their funds before 8 January 2025. All unclaimed assets above USDC 10 will be transferred to Coinhouse, whilst assets of USDC 10 or less will be charged a fee of USDC 10 and the account will be closed. These transfers will start between 8 January and 16 January, temporarily stopping withdrawals during the process. Bybit has also clarified that there will be no fees regarding the conversion of assets to USDC or the transfer of funds to Coinhouse.

Thailand: Thailand to trial cryptocurrency payments for tourists in Phuket

On 10 January 2025, it was reported that Deputy Prime Minister and Finance Minister Pichai Chunhavajira had announced that Thailand had decided to trial cryptocurrency payments in Phuket as part of a pilot programme aimed at offering foreign visitors an alternative payment method. The initiative aims to make digital transactions more accessible in tourism-centric cities, helping Thailand remain competitive in attracting tourists.

Before making any Bitcoin purchases, tourists participating in the programme will be required to register their Bitcoin through a Thai exchange and complete identity verification. To facilitate transactions, a clearing house will convert Bitcoin payments into THB.

The programme will reportedly comply fully with all existing legal standards, with no need for any legal amendments.

European Union: ECB welcomes Bulgarian market to TIPS

On 19 December 2024, the European Central Bank (ECB) announced that the Bulgarian market had successfully joined the TARGET Instant Payment Settlement (TIPS) service, following successful migration in December 2024.

Europe: New bank-backed EPI processes first e-commerce transactions

On 7 January 2025, it was reported that the European Payments Initiative (EPI), a bank-backed venture initially set up to rival Visa and Mastercard in Europe, had completed its first e-commerce transactions using its Wero e-commerce payment solution between the end of November and mid-December 2024. Further e-commerce transactions will be conducted in the first half of this year, before officially launching in Germany over the summer, Belgium in autumn, and France at the start of 2026. In-store payments will be added in 2026 alongside other capabilities such as BNPL, merchant loyalty, and expense sharing. The EPI already operates a person-to-person wallet which, according to its November 2024 announcement, has 14 million users.

United Kingdom and Europe: AstroPay introduces multicurrency wallet for cross-border payments

On 17 December 2024, it was reported that the cross-border finance fintech Astropay had introduced its multicurrency wallet. The wallet will let users store, manage and exchange multiple currencies, helping them simplify international travel and work. This news comes alongside announcements that AstroPay has secured an electronic money institution (EMI) licence in Denmark which allows it to expand its services to Denmark, Spain, and Portugal. It looks to extend services to additional European Union countries such as Germany, France, Italy and Poland by the end of 2025.

India: WhatsApp Pay available to all Indian users

On 3 January 2025, it was reported that meta-owned WhatsApp Pay has been given approval by the National Payments Corporation of India (NPCI) to roll out its person-to-person payments service to all Indian users. The service makes it possible for people to send payments directly to WhatsApp contacts. It launched in 2024 but the NPCI mandated a phased rollout, limiting it to 40 million users at first, and then 100 million users in 2022. Now, all limits have been removed, meaning the full 500-million strong customer base in India will have access to the service.

United Kingdom: Monzo introduces sign language chat

On 18 December 2024, it was reported that hearing-impaired customers of Monzo can now chat with the bank’s customer support team via the SignLive app, an online British Sign Language (BSL) interpreting service. Users simply need to log in to the SignLive app and find Monzo in the directory. This connects customers with interpreters who relay the conversation to a Monzo customer support team member in real-time using video relay services. Monzo states that this is part of their commitment to accessibility and inclusion. They follow in the footsteps of Santander and Nationwide, who have both recently introduced similar services.

Australia: NAB aims to phase out passwords for internet banking in five years

On 17 December 2024, it was reported that National Australia Bank (NAB) has set a goal to phase out password use in internet banking within the next five years. It states that passwords will be replaced with security measures such as passkeys and biometric recognition technology. The idea is that by removing passwords, that are often used by people across multiple sites and platforms, the risk of scams and fraud from cyber-attacks will be reduced.

Chapter 4 - Surveys and Reports

European Union: ECB study on payment attitudes of consumers in the euro area

On 18 December 2024, the European Central Bank (ECB) published its study on the payment attitudes of consumers in the euro area (SPACE) and a related webpage. The focus is on payment behaviour and preferences. The study collected results from 50,000 euro area consumers via online and telephone interviews conducted between September 2023 and June 2024. Respondents were asked about topics such as the benefits of using cash and cards, how they withdraw cash, and access to financial products.

Some key findings include:

• Online payments: The share of online payments in consumers’ day-to-day payments has continued to increase. In 2024, 21% of consumers’ day-to-day payments were made online, compared to 17% in 2022. In terms of payment value, 36% of day-to-day payments were online, compared to 28% in 2022. For online payments, the most frequently used method was cards, representing 48% of transactions. The share of e-payment solutions, i.e. payment wallets and mobile apps, was 29%, a rise from 26% in 2022.
• Point of sale (POS) payments: For POS payments, the most frequently used method was cash, used in 52% of transactions. However, this is a decrease from 58% in 2022. Cash was the most frequently used payment method for small-value payments at the point of sale, in line with previous surveys. For payments over €50, cards were the most frequently used payment method.
• Payment preferences: Stated payment preferences were unchanged from 2022. In 2024, 55% of euro area consumers expressed a preference for cards and other cashless payments when paying in a shop, while 22% preferred cash and 23% had no clear preference. The perceived key advantages of cash were, first, its anonymity and protection of privacy and, second, the perception that it makes consumers more aware of their own expenses. The perceived key advantages of card payments were that consumers do not have to carry cash with them, and that card payments are faster and easier. A majority of the surveyed euro area consumers - 58% - said they were concerned about their privacy when performing digital payments or other banking activities.
• Access to cash: Most surveyed euro area consumers said they were satisfied with their access to cash, but this satisfaction has decreased slightly. A large majority, i.e. 87% of consumers, find it fairly easy or very easy to get to an ATM or a bank. Most consumers, i.e. 57%, never paid a fee when withdrawing cash from an ATM whereas 11% paid a fee always or most of the time.

United States: CapitalOne buy now pay later statistics

On 31 December 2024, CapitalOne updated their report ‘Buy Now Pay Later Statistics’ which covers key buy now pay later (BNPL) trends in the U.S.

Key findings include:

• In 2024, there were 86.5 million BNPL users in the U.S., up 6.92% year-over-year (YoY).
• The average BNPL loan amount is $135 over six weeks, whereas traditional instalment loans average $800 over 8-9 months.
• 89.3% of BNPL users report making all payments on time and in full.
• BNPL users are more likely to be employed; 70.6% have full time or part-time jobs.
• In 2024, BNPL purchase volume is expected to total $132.7 billion, up 14.1% YoY.

Global: Chainalysis report on 2024 crypto hacking

On 19 December 2024, Chainalysis released a webpage previewing its comprehensive 2025 Crypto Crime Report. According to the preview:

• In 2024 the amount of funds stolen rose by about 21.07% year-over-year (YoY) to $2.2 billion, with the number of hacking incidents increasing from 282 in 2023 to 303 in 2024.
• Between January and July 2024, the total value stolen had already reached $1.58 billion, which is approximately 84.4% higher than the amount stolen during the same period in 2023. The intensity of crypto hacking changed around mid-year, with the upward trend in 2024 slowing significantly after July and then remaining relatively steady.
• In 2023, hackers affiliated with North Korea stole around $660.50 million across 20 incidents. In 2024, this figure increased to $1.34 billion across 47 incidents, representing a 102.88% rise in value stolen. These figures account for 61% of the total amount stolen for the year and 20% of the total incidents.
• There was a noticeable shift in focus from decentralised finance platforms to centralised services in 2024. Since centralised exchanges handle large amounts of user funds, a private key compromise can have devastating effects. For instance, the $305 million DMM Bitcoin hack, one of the largest crypto hacks to date, may have resulted from private key mismanagement or inadequate security measures.

Global: Global Payments releases 2025 Commerce and Payment Trends Report

In December 2024, Global Payments Inc., a provider of payment technology and solutions, released its annual Commerce and Payment Trends Report and accompanying press release. The report is based on discussions with industry experts and a survey of 600 payment decision makers and influencers.

Key payments trends identified include:

• AI's impact: AI has transitioned from a theoretical concept to a practical tool, significantly enhancing client services, marketing, and fraud protection. While enterprises are cautious about data privacy, small and midmarket businesses are more enthusiastic about AI applications.
• Embedded payments in B2B: The benefits of embedded payments, previously popular in consumer settings, are now being leveraged in B2B transactions, streamlining business processes and supply chains.
• Digital security and fraud prevention: With the rise of sophisticated fraud, organisations are adopting advanced security measures like biometrics and tokenisation to protect transactions.