.svg)
As interest in the potential of digital assets grows, regulators and traditional financial institutions are seeking ways to safely and securely adopt the positive features of cryptocurrencies, while offering protections from their worst excesses.
This involves harnessing the speed and transparency of blockchain transactions without the extreme volatility or exposure to criminal activity associated with crypto.
Two of the most prominent means of bringing digital assets into everyday use are stablecoins and central bank digital currencies (CBDCs).
Most jurisdictions are exploring both options, with stablecoin regulations being introduced or considered in the US, Hong Kong, Bahrain, the UK, the EU and beyond.
The Bahamas, Jamaica and Nigeria have led the way by launching official digital currencies.
Meanwhile, the EU, the United Arab Emirates (UAE) and Russia are advancing preparations for their own CBDCs, each with distinct motivations for adopting this form of central bank money.
The notable exception is the US, which has taken a strongly anti-CBDC stance since the Trump administration took office.
Instead, it is focusing on bringing existing cryptocurrencies into the mainstream, initially by introducing a regulatory framework for the use of stablecoins.
According to the Atlantic Council’s CBDC tracker, 137 countries and currency unions, representing 98% of global GDP, are exploring a CBDC, up from just 35 in 2020.
In addition, it notes that 72 countries are in the advanced stages of developing a CBDC, meaning the development, pilot or launch phase.
This highlights the US as a significant outlier – so what are other jurisdictions seeking in CBDCs?
Global progress on CBDCs
In July 2025, the UAE issued a progress report on the development of the digital dirham. The Central Bank of the UAE (CBUAE) stated that the project is being developed in line with standards set by global bodies such as the Bank for International Settlements (BIS).
The aim is for the CBDC to provide a secure, accessible and programmable alternative to cash for both domestic and cross-border use. It also forms a key part of the UAE’s wider strategy to modernise its monetary framework and accelerate the digital transformation of its economy.
The digital dirham is also expected to reduce transaction costs, boost financial inclusion in underserved communities and support monetary policy transmission.
The EU sees the development of the digital euro as part of its broader push for payments sovereignty, as it seeks to limit its reliance on the large US-based card networks.
In July 2025, the European Central Bank (ECB) announced it is in the process of drafting a digital asset scheme rulebook, which will lay the groundwork for the introduction of a digital euro.
Leading advocates such as Christine Lagarde argue that a digital euro would safeguard the bloc’s monetary sovereignty while boosting efficiency, competition and innovation.
Australia is taking a broad approach to regulating and adopting digital assets, including the potential introduction of a CBDC.
Its Project Acacia is exploring a range of payment use cases, testing stablecoins and bank deposit tokens, and piloting a wholesale CBDC.
Israel took a step towards issuing a digital shekel in March 2025, when it unveiled a preliminary design for the CBDC.
The Bank of Israel highlights benefits such as real-time settlement, interoperability with other payment systems and digital assets, and enhanced user privacy.
The digital shekel is expected to meet both domestic and cross-border payment needs while maintaining compliance with anti-money laundering and counter-terrorism financing (AML/CTF) regulations.
An interesting approach to CBDCs is that of Russia, which is planning the large-scale implementation of the digital ruble for September 2026.
It is aiming to use the CBDC to bolster its weakened economy, bypassing Western financial infrastructure such as Swift and diminishing the impact of the sanctions placed on it following its invasion of Ukraine.
Finally, the UK is continuing to investigate the possibility of a digital pound, although the project is moving slowly, with no target date set for its introduction.
In a speech in July 2025, Bank of England governor Andrew Bailey said he remains unconvinced of the need for a UK CBDC, making it unlikely that progress will accelerate in the near term.
CBDCs vs stablecoins
Regulators developing CBDCs highlight the opportunities offered by creating digital versions of fiat currencies.
They argue that CBDCs could significantly improve the efficiency of payment systems through real-time settlement and greater interoperability.
CBDCs are also seen as a way to increase competition and innovation while safeguarding user security and privacy.
Meanwhile, in their different ways, the EU and Russia are focused on the ways in which CBDCs can underpin payments sovereignty, reducing reliance on systems and networks that are based in other jurisdictions and thus beyond the control of their central banks.
Across the board, the attraction of CBDCs for regulators is this idea of maintaining control of the currency while avoiding the inherent risks of crypto – volatility, lack of scrutiny, risk of facilitating unlawful activity.
However, a key question is that of adoption, and, as the UK’s Andrew Bailey has queried, whether there is a meaningful use case for CBDCs.
In some jurisdictions this has prompted debate on the relative merits of retail versus wholesale CBDCs. Many see greater potential for CBDCs in interbank settlement than in everyday consumer use.
This reflects the broader debate of private versus public control: should the market, through stablecoins, drive the development of digital assets, or is it more sensible to promote centralised control via CBDCs?
The US has made its position clear, focusing on stablecoins and declaring that private innovation is the best way to achieve the desired outcomes.
At present, stablecoins appear to be leading the race, with regulatory frameworks already in place in jurisdictions such as the US and Hong Kong, and more being developed.
How things play out in this area could have a profound effect on the future of payments and the financial services more widely, so it will be interesting to see whether the US bet on stablecoins pays off.
