Albert Guarner Piquet’s Post

European Systemic Risk Board - Crypto-assets and decentralised finance Source: https://lnkd.in/gm7t3eBu #cryptoasset #decentralized #finance #europe #esrb Highlights: Given the vast scope of the crypto-asset universe, the report distinguishes among the specific areas that concern financial stability. The report first defines the three distinct types of crypto-assets considered from a financial stability perspective: (i) native tokens, (ii) reserve-backed stablecoins, and (iii) algorithmic stablecoins Linkages between crypto-assets and the traditional financial system could be an important channel of shock transmission and require specific attention to understand any systemic risks that may emerge from a growing crypto-asset universe. From the perspective of the ESRB, the central issue is how the crypto-asset market could become systemically relevant. Crypto-asset markets, especially after collapsing since November 2021, are not systemic in size and interconnections. The report also considers potential policy implications, taking into account the extent to which existing policy measures, including the EU’s Regulation on Markets in Crypto-assets (MiCA), are sufficient to mitigate financial stability and macroprudential risks. The findings of this report suggest that it is necessary to improve the capacity of public authorities, including in the EU, to monitor potential contagion channels between the cryptoasset sector and the traditional financial sector, as well as within the crypto-asset sector. MiCA will subject issuers and crypto-asset service providers to requirements designed to safeguard consumers, market integrity and financial stability. The applicable legal framework should provide authorities with access to data useful in identifying potential risks to financial stability posed by the crypto-asset sector and mitigating them. Moreover, it will be beneficial to carry out assessments of risks posed by (i) crypto-asset conglomerates, taking account of market developments following the application of MiCA; and (ii) leverage using crypto-assets, and to identify potential additional actions to mitigate observed risks. Furthermore, the report endorses the continued exchange of knowledge between public authorities in the EU on market developments, focusing on several areas where potential risks may emerge, notably regarding (i) operational resilience, (ii) DeFi, and (iii) crypto-asset staking and lending. Finally, the principle of proportionality should be given due consideration as well as the need to ensure a harmonised EU reporting framework. 

ESRB strengthens Europe’s path toward safe, scalable stablecoin innovation The European Systemic Risk Board (ESRB) has released its latest review of crypto-asset markets, highlighting the increasing integration of stablecoins and digital assets into mainstream finance. With global stablecoin market capitalisation more than doubling since 2023, the ESRB sees strong momentum, but also the need for robust guardrails as adoption expands. To support a more resilient market, the ESRB has issued a Recommendation encouraging: - Clear regulatory expectations for stablecoins with complex cross-border issuance models - High-quality, liquid reserve assets within the EU - Strong supervisory cooperation to ensure consistency across jurisdictions These actions aim to ensure Europe remains a competitive hub for digital asset innovation, while reinforcing trust and financial stability for investors and institutions. Europe’s move is a constructive step toward global convergence on stablecoin policy. As countries modernise financial systems, such frameworks show how innovation can scale responsibly, a valuable benchmark for jurisdictions like India shaping their own digital asset future. European Systemic Risk Board | Indian Ministry of Finance | Reserve Bank of India (RBI) #ESRB #Stablecoins #EU #DigitalAssets #CryptoRegulation #Innovation #FinancialStability #DigitalFinance https://lnkd.in/eQT38mpu

Financial innovations are important and can improve our lives. But some innovations are not worth taking the risk. Such as multi-issuer #stablecoins (MISCs).   MISCs pose serious #financialstability risks in the EU and elsewhere, resulting from vulnerabilities inherent in their business model:   - First, a run could prompt holders to redeem from the EU issuer, putting strain on its reserves, delaying redemptions and amplifying runs within the bloc. - Second, restrictions imposed by third-country authorities on the transfer of reserves between jurisdictions could exacerbate these risks during periods of stress.   We discuss these risks in our 2025 #ESRB Report on Crypto Assets, and Recommendations on Multi-Issuer Stablecoins.   Based on our analysis, the ESRB has issued a set of recommendations addressing the risks identified:   1.              Non-permission: The ESRB recommends that the Commission does not consider the schemes as being permitted within the current MiCAR framework. The Commission should act on this by the end of 2025. 2.              Mitigation: If the European Commission does not provide such a clarification on this issue, the ESRB recommends mitigating action, incl. equivalence of third country legal regimes, enhancing cooperation with third countries, addressing barriers reserve asset mobility, enhancing prudential requirements, fostering supervisory convergence for crypto-asset services providers, full access to relevant data, transparency through disclosure   Very important initiative, and – co-chairing the ESRB’s Crypto Asset Task Force with Richard Portes – big thanks to all experts at the ESRB Secretariat, #ESMA and ESRB member authorities for the important risk assessment.   https://lnkd.in/enpAym4R

News on Crypto regulation: Fixing Gaps and Overlaps. The Financial Stability Board (FSB) has published its Review on Global Regulatory Framework for Crypto-asset Activities, assessesing the implementation of the FSB global regulatory framework for crypto-asset activities, and more specifically - the progress made by jurisdictions in developing regulatory frameworks for crypto-asset service providers (CASPs) and stablecoin arrangements (GSCs). While the report acknowledges progress in implementing the FSB's recommendations, it also reveals notable gaps and inconsistencies across jurisdictions. Key Findings: 1. Fragmented Regulation of Global Stablecoins (GSCs): *Few jurisdictions have finalised comprehensive regulatory frameworks for GSCs. *Even where frameworks are in place, alignment with FSB recommendations is often incomplete. *Critical gaps include inadequate requirements for risk management, capital buffers, recovery and resolution planning, and insolvency frameworks. *Variations in redemption, custody, disclosure requirements, and reserve collateralisation frameworks across jurisdictions create regulatory challenges and opportunities for regulatory arbitrage, complicating the oversight of GSCs operating across borders. 2. Gaps in Crypto-asset Activity Regulation (CA Recommendations): *Financial stability risks remain insufficiently addressed, particularly in the regulation of CASPs. *Higher-risk activities, such as borrowing, lending, and margin trading, often lack comprehensive regulatory coverage. *The absence of reporting frameworks for CASPs limits authorities' ability to monitor and manage potential risks effectively. *Supervision and enforcement efforts lag behind regulatory development, with many jurisdictions lacking the necessary tools for compliance and oversight. The primary reasons contributing to these challenges to regulating Crypto - world are as follows: 1. Inadequate Regulatory Mandates and Tools: Existing legal and regulatory frameworks in many jurisdictions are not equipped to fully address the unique risks posed by global stablecoins. Authorities need to develop tailored regulatory approaches that recognize and treat stablecoins as distinct payment instruments. 2. Domestic Fragmentation and Legal Barriers: Fragmented responsibilities among domestic authorities, differing definitions of crypto-assets, and legal obstacles such as privacy or secrecy laws hinder effective information sharing and collaboration, further complicating regulatory efforts. 3. Lack of Cross-Border Coordination: The global nature of crypto-asset markets is not adequately addressed due to fragmented, inconsistent, and insufficient international collaboration. Authorities typically rely on locally focused mechanisms for enforcement and licensing, which are not sufficient for managing cross-border activities. https://lnkd.in/ehKpNPdr

ESRB Report on Crypto-Assets and Decentralised Finance The European Systemic Risk Board (ESRB) has released a comprehensive report analysing emerging systemic risks across the crypto-asset ecosystem — focusing on stablecoins, crypto-asset investment products, and multi-function groups (MFGs) that bridge traditional and decentralised finance. Key Highlights 🔹 Stablecoin growth and policy risks Global stablecoin market capitalisation has more than doubled since May 2023 — a rise driven partly by U.S. policy support for USD-denominated stablecoins. The ESRB warns of policy challenges in preventing non-MiCAR-compliant stablecoins issued outside the EU from becoming widely used within the bloc. Stablecoins jointly issued by EU and third-country entities pose regulatory blind spots, as these hybrid structures are not explicitly covered under MiCAR. 🔹 Crypto-asset investment products Investment products are becoming increasingly accessible to both institutional and retail investors, signalling deeper integration with mainstream finance. The crypto-services market remains highly concentrated, particularly among custodians, amplifying potential spillover risks into traditional financial markets. Most issuers of these products are domiciled outside the EU, challenging the EU’s supervisory reach. 🔹 Multi-Function Groups (MFGs) The ESRB highlights supervisory and transparency challenges arising from MFGs — complex, cross-border groups combining crypto, financial, and non-financial services. It introduces a taxonomy to classify MFGs, including both traditional financial groups expanding into crypto and crypto-native conglomerates. Policy attention is particularly warranted for Category 1 and 2a MFGs, which currently dominate the market. Why This Matters 🔹 Financial stability risks are rising as crypto assets become more interconnected with traditional finance through investment products and large, cross-sectoral groups. 🔹 Regulatory gaps persist — particularly around stablecoins co-issued with non-EU entities, where oversight fragmentation could undermine MiCAR’s effectiveness. 🔹 Transparency and cross-border coordination are critical to ensuring systemic risks are monitored effectively as crypto markets mature and consolidate. 🔹 The ESRB’s taxonomy and policy focus mark an important step toward a more structured supervisory framework for complex crypto-financial groups operating within and beyond the EU. https://lnkd.in/eRsEbex7 #CryptoAssets #DeFi #Stablecoins #MiCAR #FinancialStability #ESRB #DigitalFinance #SystemicRisk #Regulation #CryptoRegulation #Tokenisation #Fintech

The European Systemic Risk Board (ESRB) has today published its new report on stablecoins, crypto-asset investment products and multi-function groups, together with a Recommendation on stablecoins. I’m happy to have contributed to the drafting of this report as a member of the ESRB Crypto-Assets Task Force, and grateful for the opportunity to work with leading experts and take part in enriching discussions on these complex and evolving issues. The report highlights several key developments and risks shaping the crypto landscape: ➡️ Global stablecoin market capitalisation has more than doubled since the ESRB’s 2023 report, driven in part by US policies supporting US dollar-denominated stablecoins. ➡️ Stablecoins and traditional finance are increasingly interconnected, underscoring the need for high-quality, liquid reserve assets. ➡️ Crypto-asset investment products are now more accessible to both institutional and retail investors, signalling the sector’s deeper integration into mainstream finance. ➡️ Multi-function groups, offering crypto services alongside various financial and non-financial services within the same conglomerate - may operate with opaque corporate structures and engage in cross-border regulatory arbitrage, creating supervisory and transparency challenges, especially when based outside the EU. ➡️ Finally, the report warns that stablecoins jointly issued by EU and third-country entities present inherent vulnerabilities, as runs or restrictions on reserve transfers imposed by third-country authorities could amplify financial stability risks in the EU. These findings reinforce the importance of enhanced supervisory convergence, robust safeguards, and international cooperation as the crypto market continues to evolve.   Furthermore, the ESRB issued Recommendation ESRB/2025/9 on third-country multi issuer stablecoin schemes, with the following key points: • The Commission should clarify that third-country multi issuer schemes are not permitted under MiCAR by end-2025. • If this clarification is not provided, relevant authorities should take appropriate actions to mitigate the financial stability risks arising from such schemes by 2026-2027. Press release: https://lnkd.in/dVJZZrim

🔎 ESRB Publishes Report on Systemic Risks from Crypto-Assets & Issues Recommendation on Stablecoins The European Systemic Risk Board (ESRB) has just released a comprehensive report on the systemic risks posed by crypto-assets, with a particular focus on stablecoins. Notably, the ESRB has adopted a new Recommendation (ESRB/2025/9) addressing third-country multi-issuer stablecoin schemes, citing evolving market dynamics and current regulatory gaps. Key Takeaways: - The ESRB recommends that the European Commission clarify that such schemes are not permitted under the current MiCAR framework—action is expected by end-2025. - Should this clarification not materialize, the ESRB urges authorities to implement enhanced supervisory measures, foster closer international cooperation, and introduce legal reforms by end-2026 (with remaining safeguards by end-2027). - Progress will be closely monitored, and authorities must report on their actions—or justify inaction—to the ESRB and EU institutions. https://lnkd.in/dFFPB3mw

Australia was once an early adopter in financial innovation. Now, its own regulator says it’s falling behind. In a landmark speech, ASIC Chair Joe Longo warned that Australia must “seize the opportunity or be left behind” as tokenisation reshapes capital markets globally. The message was clear: the world is tokenising faster than we’re regulating. Longo called tokenisation the next phase of market evolution — capable of breaking assets into smaller, tradeable units and enabling instant settlement. The numbers speak for themselves: Switzerland’s digital exchange has surpassed $3.1B in tokenised bond issuances since 2021. J.P. Morgan plans to fully tokenise its money market funds within two years. Nasdaq aims to launch 24-hour tokenised securities trading by late 2026. Meanwhile, Australia risks becoming, in Longo’s words, “the land of missed opportunity.” Once known for pioneering electronic trading systems, Australia’s market leadership is now under pressure. While other nations integrated tokenised bonds, funds, and securities into their capital markets, Australia’s regulatory framework remains slow to adapt. That’s about to change. Longo announced that ASIC will review and relaunch its Innovation Hub — designed to open communication between regulators and innovators, supporting fintech growth rather than blocking it. The plan: An open-door policy for startups facing licensing or compliance hurdles. Collaboration with Treasury’s proposed crypto exchange licensing law. Alignment with ASIC’s new digital asset guidance, classifying stablecoins, wrapped tokens, and tokenised securities as regulated financial products (transition period until June 2026). It’s the beginning of a new phase — not of deregulation, but of regulated acceleration. Here are the BD takeaways for Web3 teams: - ASIC’s direction means tokenised funds and digital securities will soon need full compliance infrastructure. Teams who prepare early will become the default partners for institutions. - The new Innovation Hub is an open door — BD leaders should engage now, offering input and pilot proposals to shape Australia’s tokenisation framework. - Learn from Switzerland’s bond pilots, J.P. Morgan’s tokenized MMFs, and Nasdaq’s 24/7 trading push. Success in Australia will come from adapting those playbooks to local regulation. - Every asset class — bonds, funds, commodities — is being rebuilt as data. BD teams need to reframe products around on-chain liquidity, compliance, and interoperability. Australia’s financial future now hinges on whether it can match innovation with regulation. The world isn’t waiting — and the infrastructure for tokenised markets is already being built elsewhere. This isn’t about catching up to crypto. It’s about catching up to the future of finance. Will Australia reclaim its leadership in market innovation — or will tokenisation become another opportunity it watches from the sidelines?

Global finance is at an inflection point. Here are 5 insights from Paxos CEO Charles Cascarilla on the next generation of tokenization and stablecoin policy: During IMF–WEF week, Charles spoke at the Atlantic Council alongside MAS Managing Director Chia Der Jiun on how regulation, innovation, and adoption are shaping the next phase of digital finance. 1️⃣ Tokenization is past the pilot stage Tokenization is no longer theoretical. Leading asset managers and financial institutions are launching real, production-grade products. The focus has moved from experimentation to execution, and there is growing consensus that tokenization will underpin the modernization of capital markets. 2️⃣ Regulation is driving institutional confidence Across jurisdictions, regulatory clarity is accelerating scale. Frameworks like MAS’s stablecoin rules, the EU’s MiCA regulation, and the U.S. GENIUS Act are aligning around shared principles: ❏ Full reserve backing ❏ Segregation of client assets ❏ Redemption at par value This consistency is giving institutions the trust and structure needed to participate confidently. 3️⃣ Global reciprocity is becoming possible Equivalency between trusted jurisdictions is within reach. Harmonized frameworks will allow compliant stablecoins to operate globally while maintaining oversight. The outcome is an interoperable network of stablecoins that move freely through regulated markets. 4️⃣ Stablecoins can reinforce monetary systems Well-regulated stablecoins can strengthen, not weaken, sovereign currencies. Transparent and fully backed digital dollars can expand inclusion, reduce costs, and improve visibility across the financial system. They offer policymakers more control and insight than unregulated alternatives. 5️⃣ The next wave will be infrastructure-led The next phase of tokenization will be powered by infrastructure. Institutions are seeking 24/7 settlement, programmable assets, and real-time liquidity, and the firms building regulated, enterprise-grade infrastructure will define how global finance evolves. Paxos is building that foundation. A trusted, regulated platform for tokenization and stablecoins, powering the shift toward a more open, compliant, and programmable financial system.