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FATF: Report on regulatory challenges from DeFi
The Financial Action Task Force (FATF) has published Targeted Report on Regulatory Challenges from Decentralised Finance (DeFi), which updates and complements the FATF’s 2021 analysis set out in the FATF's 2021 Updated Guidance for a Risk-Based Approach to Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs).
The FATF has noted the rapid growth of DeFi, and see how its unique features are being exploited by bad actors. With regard to its own standards, the report clarifies that DeFi arrangements do fall within scope of Recommendation 15 where a natural or legal person exercises control or sufficient influence over the arrangement. FATF identifies a list of on-chain and off-chain indicators of control and sets out recommendations to assist jurisdictions, financial institutions, VASPs and DeFi arrangements to both protect the integrity of the financial system and prevent and mitigate criminal exploitation of the DeFi ecosystem. [22 Jul 2026] #DeFi #VirtualAssets #DigitalAssets
FATF: Update on implementation of the FATF Standards on VAs and VASPs
The Financial Action Task Force (FATF) has published its seventh Targeted Update on Implementation of the FATF Standards on Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs), which assesses jurisdictions' compliance with FATF Recommendation 15. . Overall, jurisdictions, including those with materially important VASP activity, have made progress since 2025 towards developing or implementing anti-money laundering and counter-terrorist financing (AML/CFT) regulation and taking supervisory and enforcement actions.
However, the FATF highlights the need for further work on regulation, licensing and registration despite this continued progress. It observes that jurisdictions continue to face difficulties in identifying individuals and entities that conduct VASP activities, with many yet to translate legal frameworks into effective supervision and enforcement in practice.
The report finds that 83% of surveyed jurisdictions have now passed legislation implementing the Travel Rule, up from 73% in 2025; a further 11 jurisdictions report that implementation is under way. [20 Jul 2026] #VirtualAssets #DigitalAssets
BIS publishes bulletin in relation to frontier AI and cyber risk
The Bank of International Settlements (BIS) has published a bulletin in relation to frontier AI and cyber risk. Key takeaways include:
- Frontier AI models increase the speed, scale and complexity of cyber attacks, and they also strengthen cyber defence. However, the costs are asymmetric and may favour attackers.
- The medium-term impact on systemic cyber risk depends on the various actors' access to the most advanced tools, on compute power to run the tools and on economic incentives.
- Given the pace of recent developments, swift adoption of frontier AI models to review code bases and fix vulnerabilities is essential. International coordination can support authorities in addressing these issues.
The views expressed in this publication are those of the authors and do not necessarily reflect the views of the BIS or its member central banks. [20 Jul 2026] #AI #Cyber
UK
BoE: Letter from the Governor to the Daily Mail
The Bank of England (BoE) has published a letter from its Governor, Andrew Bailey, to the Daily Mail in response to an article about frontier AI and cyber-attacks which appeared in the paper. The Governor explained that the BoE ‘has the right investment, expertise and capabilities and works extremely closely with expert partners including the National Cyber Security Centre’. Mr Bailey then said, ‘the issue that should concern the public is the wider risk posed by frontier AI to the financial sector and its customers’, but he noted the role of the regulator in warning banks of this risk and requiring proof of their controls. He said that, ‘it is also why the Bank has called for stronger international coordination around testing frontier AI models before wider deployment’. [24 Jul 2026] #AI #Cyber
BoE sets out framework for financial stability policy through the lens of money's functions
The Bank of England (BoE) has published a speech delivered by Nathanaël Benjamin, Executive Director for Financial Stability Strategy and Risk, at the OMFIF Economic and Monetary Policy Institute. Mr Benjamin set out a unifying framework for understanding central bank policy through money's three core functions: as a safe store of value; a reliable unit of account; and an effective medium of exchange.
He applied this framework to three topical policy questions:
- On bank capital requirements, Mr Benjamin argued that broad-based capital reductions are not supported by evidence of current lending constraints and that targeted reforms are the appropriate response. The Financial Policy Committee’s July 2026 Financial Stability in Focus announced a package of reforms to strengthen the usability and releasability of regulatory buffers and to adjust elements of the leverage framework, including removing features that caused domestic lending to be disproportionately penalised relative to other jurisdictions.
- On non-bank finance, he sought to explain why non-banks warrant a different regulatory treatment from banks, observing that, unlike banks, they do not create money or issue deposit-like liabilities, meaning losses fall on investors rather than depositors, placing them at a greater remove from the core monetary system.
- On hedge fund leverage, he argued that activity-based policy focused on the resilience of core markets is more effective than entity-level leverage requirements.
Mr Benjamin also addressed digital money, noting the proposed regime for systemic stablecoins (which requires issuers to hold high-quality backing assets including central bank deposits, enabling par redemption) and the broader vision for a multi-money system in which cash, bank deposits, tokenised deposits and stablecoins coexist and are freely exchangeable at par, with central bank money continuing to serve as the monetary anchor. [21 Jul 2026] #Stablecoins #DigitalAssets
Crypto and Digital Assets APPG launches inquiry into access to banking for the crypto sector
The Crypto and Digital Assets All-Party Parliamentary Group (APPG) has launched an inquiry into access to banking services for the UK crypto and digital assets sector. The inquiry focuses on:
- the ability of crypto and digital asset businesses to open and retain bank accounts and access associated professional services, including insurance; and
- restrictions imposed by banks on crypto-related transactions, such as payment blocks and transfer limits.
The scope of the inquiry also extends to examining international approaches and examples of good practice from other jurisdictions, and to exploring potential solutions that improve access while maintaining appropriate safeguards against fraud and financial crime.
Contributions are requested by 31 August 2026. Submissions must be no longer than six pages.
(APPGs are informal, cross-party groups formed by MPs and Members of the House of Lords who share a common interest in a particular policy area, region or country. They are not official parliamentary committees.) [21 Jul 2026] #Crypto #DigitalAssets
FCA Horizons – Issue 14
The FCA has published FCA Horizons – Issue 14, which highlights how the FCA is preparing for technology-led change across financial services, while supporting innovation and growth, protecting consumers and markets, and strengthening resilience. [20 Jul 2026] #AI #Cyber #OperationalResilience #Crypto #DigitalAssets #OpenFinance
Thailand
SECT consults on amendments concerning prohibited characteristics of major shareholders of business operators
SECT has published a consultation on proposed amendments to the prohibited characteristics of major shareholders of securities business operators, derivatives business operators, and digital asset business operators. The proposed amendments aim to ensure that major shareholders are appropriately qualified, supporting confidence in the Thai capital market. Responses are requested by 16 August 2026. [17 Jul 2026] #DigitalAsset
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