05-09-2025 
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The digital asset landscape continues to evolve in Europe, as the European Central Bank (ECB) sets up an innovation hub with 70 participants to test its digital euro project, and the United Kingdom draft digital asset legislation proposes that foreign stablecoin issuers and DeFi may not be regulated in the country.
Digital euro
On May 5, the ECB—the central bank of the European Union—announced that it had established an “innovation platform” to collaborate with European stakeholders on its digital euro project, the bloc’s long-mooted central bank digital currency (CBDC).
According to the ECB, “The innovation platform simulates the envisaged digital euro ecosystem, in which the ECB provides the technical support and infrastructure for European intermediaries to develop innovative digital payment features and services at European level.”
Following a call for interest published in October 2024, around 70 participants, including startups, merchants, fintechs, banks and other payment service providers, have signed up to participate in the platform. Among them were global professional services company Accenture (NASDAQ: ACN), Swiss telecommunications company Swisscom (NASDAQ: SWZCF), Spanish bank CaixaBank (NASDAQ: CIXPF) and ‘big four’ audit firm KPMG.
The participants joined one or both of two defined ‘workstreams,’ “pioneers” and “visionaries.” The former will focus on conditional payments, where a payment is only triggered if a condition is met, such as the arrival of a parcel, while the latter will explore other potential use cases with societal impact, such as financial inclusion.
“We welcome the huge amount of interest that market participants have shown in this exciting initiative,” said Executive Board member Piero Cipollone. “The breadth and creativity of the proposals highlights the digital euro’s potential as a catalyst for financial innovation in Europe, including the development of new solutions that further enhance the payment experience for Europeans and create market [opportunities].”
Journey so far
The EU has been exploring the possibility of a CBDC for several years, having launched the digital euro “preparation phase” back in November 2023.
In November 2024, the ECB called for partners to test conditional payments in a CBDC simulation to start in February 2025 and open applications for partners willing to explore tokenization and other innovative use cases.
In February of this year, the ECB announced it was expanding its initiative to settle transactions between institutions with a wholesale CBDC payment system.
The following month, ECB President Christine Lagarde reaffirmed the bank’s commitment to the project, saying that the team behind the digital euro was “focused on accelerating the pace” and highlighting how they are campaigning to get other stakeholders like the EU Parliament and European Commission on board.
Lagarde also said that the testing phase of the digital euro is scheduled to end by October, after which the ECB will publish a final report and decide whether to issue a CBDC.
However, this decision would ultimately be subject to the passage of legislation by the European Parliament and approval by the European Commission.UK draft digital asset regulation
Not to be left behind by its continental neighbor, the U.K. has also been busy setting the stage for digital assets to thrive in the country.
On April 29, HM Treasury released its draft digital asset legislation, also called the “future financial services regulatory regime for cryptoassets,” which aims to protect consumers and make the U.K. an attractive venue for digital asset firms.
“Through our Plan for Change, we are making Britain the best place in the world to innovate — and the safest place for consumers,” said Chancellor of the Exchequer Rachel Reeves, in an April 29 statement. “Robust rules around crypto will boost investor confidence, support the growth of Fintech and protect people across the UK.”
The draft regulations are high-level, with detailed rulemaking authority delegated to the Financial Conduct Authority (FCA), the U.K.’s top finance sector watchdog.
However, the draft does outline several high-level digital asset activities that would bring an entity within the purview of U.K. regulation. Namely, operating a digital asset trading platform, dealing in digital assets, dealing in digital assets as an agent, arranging deals for digital assets, safeguarding and custody of digital assets, digital asset staking, and issuing a stablecoin from the U.K.
Notably absent from these groups are foreign digital asset entities that only engage indirectly with U.K. consumers via a regulated trading platform or dealer, and foreign entities that only engage with institutions—provided those institutions aren’t acting as intermediaries to U.K. consumers.
This means certain digital asset providers will fall outside the “regulatory perimeter,” including foreign stablecoin issuers, even if U.K. residents use their stablecoin.
“Truly” decentralized finance (DeFi) activities would also fall outside the scope of the proposed regulation.
“Where there is no person that could be seen to be undertaking the activity by way of business, then requirements to seek authorisation will not be applicable,” said the Treasury. However, it added that the FCA would determine in any given case “whether there is a sufficiently controlling party or parties that ought to be subject to the requirement to be authorized.”
The Treasury seeks feedback on the draft regulations until May 23, 2025.
Watch: Finding ways to use CBDC outside of digital currencies
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