Crypto / CBDC

Its role in the system

Experimental and new “rails” for moving money, built on blockchain and on central bank digital money. Here crypto technology matters not as an investment but as a way to send value around the clock, across borders and without a chain of correspondent banks. Central banks answer with digital currencies of their own (CBDC) so as to keep control over money.

Functions

1. Stablecoins as a means of payment — tokens pegged to the dollar or the euro (🌍 USDT, USDC) that the issuer promises to redeem one for one. They are used to settle between crypto exchanges, to pay out internationally, and as a “digital dollar” in countries with an unstable currency.
2. Central bank digital currencies (CBDC) — retail ones (for people and business: 🇪🇺 a digital euro is being prepared as “digital cash”; 🇨🇳 the e-CNY, piloted since 2020, works from 2026 as interest-bearing “digital deposits” in banks) and wholesale ones (for settlement between banks and central banks).
3. Cross-border settlement on a blockchain — networks such as 🌍 Ripple (the XRP Ledger) and central bank experiments in exchanging CBDCs between countries (🌍 mBridge) try to cut a payment's journey from days to seconds.
4. Micropayments on top of Bitcoin — 🌍 the Lightning Network opens “payment channels” between participants so that small instant payments can be made without writing each one into the blockchain.
5. Tokenised bank money — deposits in token form for instant settlement between corporate clients and for paying for tokenised assets.

What makes it special

• How it earns, and why the reserves are the whole risk: a stablecoin issuer puts the reserves into short government bonds and deposits and collects the interest, while paying none of it to token holders (🇺🇸 the GENIUS Act bans that outright); networks and payment providers take a fee for the transfer and the exchange. Hence the core vulnerability: a stablecoin is worth exactly as much as the assets behind it are sound and as fast as redemption works — "algorithmic" stablecoins with no real reserves have already failed.
• Regulation is catching up: 🇪🇺 the MiCA regulation — rules for stablecoins have applied since 30 June 2024 (a licence, full reserves, a right of redemption); 🇺🇸 the GENIUS Act (passed in July 2025, its requirements taking effect no later than January 2027) — one-for-one reserves in highly liquid assets and permission to issue. 🌍 The FATF extended the “travel rule” on accompanying information to crypto transfers.
• CBDC is a question of sovereignty: central banks fear losing control over money to private tokens and foreign platforms. At the same time banks fear deposits draining away, so the digital euro comes with limits on how much anyone may hold; under the ECB's plan (October 2025) a pilot is possible in 2027 and a first issue in 2029, if EU law is adopted in time (the Council agreed its position in December 2025, the European Parliament committee in June 2026; the final text is still being negotiated).
• The border with the crypto market: the same technology, a different role — here tokens move money, while trading crypto assets as investments is a separate market zone.
• 🇨🇳 China: the state instead of private tokens: private crypto business and mining have been treated as illegal since 2021, and since February 2026 even issuing a yuan-pegged stablecoin abroad requires permission. Instead the state promotes its own digital currency: the circle of e-CNY operating banks was widened to roughly thirty in 2026, money in a named wallet counts as a bank deposit (earning interest and covered by deposit insurance), and a separate international operations centre has been set up in Shanghai for cross-border settlement.
• 🇭🇰 Hong Kong: same country, opposite approach: here crypto is licensed rather than banned. Digital asset exchanges operate under licences from the securities regulator SFC — thirteen of them as of May 2026. Stablecoins have been the central bank's business since 1 August 2025: the HKMA licenses issuers, who must hold reserves at least equal to the face value of the tokens in circulation, redeem at par and keep paid-up capital of at least twenty-five million Hong Kong dollars — and the rule also catches issuers of Hong Kong dollar-pegged tokens based outside the city.

Why it matters

When a stablecoin loses its peg, the “money” inside it suddenly stops being money: settlement on exchanges, payouts and transfers halt, and the panic spreads to banks and to the government bond market where the reserves are parked.

Links to other zones · 12

• Anti-Money LaunderingCrypto / CBDC meets Anti-Money Laundering in the travel rule, in sanctions screening of wallets, and in the risk of sanctions being evaded through stablecoins.
• Banking & Credit InstitutionsCrypto / CBDC threatens Banking & Credit Institutions with deposit outflows; banks respond with tokenised deposits and with safekeeping of issuers' reserves.
• Clearing & settlementfor digital money to become settlement rather than a mere transfer, the other leg has to be there too — the security on the same ledger; the Clearing & settlement zone tests that in the SDX, Euroclear and Fnality pilots.
• Corporations & Corporate FinanceThe first real users of Crypto / CBDC money are the treasuries of Corporations & Corporate Finance: settlement in seconds around the clock, where a correspondent transfer takes days.
• Crypto / DigitalSame technology, different role: in Crypto / Digital tokens are bought as an investment, in Crypto / CBDC they move money. Stablecoins are at the same time the main settlement currency of the crypto market.
• Debt marketCrypto / CBDC reserves are invested in short government paper, which turned stablecoin issuers into noticeable buyers in the Debt market.
• Digital paymentsCrypto / CBDC reaches ordinary customers through Digital payments: providers and wallets embed stablecoins into familiar checkout flows, so paying with a token looks to the merchant like any other payment.
• Interbank systemsWholesale central bank digital currency and tokenised deposits are not an alternative to Interbank systems but a new form of them: Fnality settles sterling through a Bank of England omnibus account, the SNB issues wholesale CBDC on SDX, and the ECB is building Pontes into TARGET.
• International transfersCrypto / CBDC competes head-on with International transfers: stablecoins and blockchain networks move value across borders without the correspondent banking chain.
• Monetary PolicyCrypto / CBDC gives Monetary Policy a new form of central bank money, while mass adoption of foreign-currency stablecoins threatens monetary sovereignty.
• Regulation & SupervisionRegulation & Supervision has reached Crypto / CBDC: licensing, full reserves, segregated safekeeping and redemption at par are the demands of 🇪🇺 MiCA and the 🇺🇸 GENIUS Act.
• Retail accessCrypto / CBDC meets ordinary money at the exchange services of Retail access, the point where normal money turns into tokens and back.

Regulation and supervision

Careers in this zone · 6

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