CoinShares has presented a report that objectifies the discussion about quantum computer attacks that has been inflated with false risks.
The analysis shows: Only a very small part of the Bitcoin supply would be realistically vulnerable – and even then only in the distant future.
The focus of the investigation is the question of which Bitcoin addresses would theoretically be vulnerable to future quantum computers. The result is not surprising: only wallets whose public key is already publicly visible are vulnerable.
This primarily includes old P2PK addresses from the early years of the network as well as wallets that have reused addresses multiple times. Modern address formats such as P2PKH, P2SH or Taproot are considered significantly more secure because the public key is only revealed when a transaction is issued.
CoinShares quantified The total amount of Bitcoins stored under such old addresses is around 1.63 million.
This number causes the usual excitement on social media, but the Coinshares analysis makes it clear: the overwhelming majority of all Bitcoins are untouchable for the foreseeable future because even quantum computing models considered “optimistic” would take centuries to break the underlying cryptography.
Around 10,000 Bitcoins would be at risk
The crucial point of the study is the differentiation between theoretically exposed and realistically vulnerable coins. CoinShares comes to the conclusion that only around 10,230 BTC – distributed across medium and large wallets – would represent an economically sensible target. This amount is negligible compared to the amount of Bitcoins in circulation and would not trigger a systemic shock even in an emergency and assuming success.
Image created with AI using ChatGPT (DALL·E)
An attack of this magnitude would be more akin to a large but market sale. The technical hurdle is also enormous. According to current research, around 13 million fault-tolerant qubits would be needed to crack a single Bitcoin key within a day.
Google’s currently most powerful chip, “Willow,” has 105 qubits. But you need around 124,000 times more to get the necessary 13 million qubits. Even Google will probably have to crack this for a while.
Preparation and composure
The publication sparked a lively debate in the Bitcoin community. While representatives like Michael Saylor and Adam Back classify the risk as greatly exaggerated and point to the long time horizon, other voices like Charles Edwards call for early preparation for post-quantum cryptography. The discussion is less about acute dangers and more about the question of how proactively Bitcoin should react to future technological developments.
At the same time, the first experiments with quantum-resistant signatures such as ML‑DSA are already running in test environments. However, a possible migration in the Bitcoin protocol would be a long-term process that requires widespread approval and extensive testing.
Technically relevant – currently harmless
The CoinShares analysis brings much-needed clarity to a debate that has recently been dominated by FUD and exaggerated warnings. Although there is a theoretical quantum risk for certain legacy addresses, no, this risk is neither acute nor systemic.
The realistically endangered amount of around 10,000 BTC is small, and the technological gap to an actually dangerous quantum computer is huge and will not be overcome in the foreseeable future.
For Bitcoin this means: Stay vigilant, promote research – and don’t panic. Cryptography will continue to evolve, but Bitcoin has plenty of time to adapt.
At the beginning of February, Deutsche Börse began trading so-called xStocks, which offer 1:1 exposure to real stocks and ETFs, via the 360X platform. The first tradable stocks include Tesla, Nvidia, Alphabet and the SPY ETF.
The securities are fully secured by the shares associated with them and are held in an insolvency-protected custody structure. The offer combines TradFi mechanisms with blockchain technology and is aimed at institutions.
Die Introducing xStocks is the first noticeable result of the cooperation between the Deutsche Börse Group and the US crypto exchange Kraken, which was announced as early as 2025. The US provider contributes its technological expertise and the tokenization standard on which the xStocks are based.
Kraken also brings its trading, custody and settlement infrastructure. There is a connection to the FX platform 360T, which is operated by Deutsche Börse group and Commerzbank. In addition, Kraken Embed will be used for institutional crypto access, and Eurex derivatives on digital assets will be available as soon as the necessary approvals are received.
24/7 trading instead of stock exchange opening hours
A central feature of tokenized shares is not apparent at first glance. While traditional stock exchanges have fixed opening hours, xStocks can be traded around the clock.
This creates more flexible risk management for investors, especially in phases of high volatility and during market-moving events outside of regular trading hours. At the same time, pricing remains closely linked to the associated stocks. Deutsche Börse will thus become one of the first large market infrastructure operators to transfer tokenized securities into a traditionally regulated environment.
Importance for the DACH region
Image created with ChatGPT-AI (DALL E)
The development is particularly relevant for the DACH region. Deutsche Börse is traditionally considered conservative and security-oriented. The fact that it is now actively engaging in tokenization gives the financial product a reputation among institutions that it did not have before.
For the first time, banks, asset managers and fintechs will have access to a standardized, regulated tokenization product that can be easily integrated into existing processes. The partnership with Kraken also shows that established players are increasingly relying on specialized crypto infrastructure to open up new digital business models.
For the crypto market, it is a further step towards mainstream adoption and a clear signal that tokenized securities can play a central role in the global financial system in the future.
Cardano is planning a Layer 1 upgrade with Ouroboros Leios in 2026, which will increase throughput in the first mainnet version from around 10 to around 500 transactions per second (50x).
Input Output is targeting a first public Leios testnet at the end of Q2.
Cardano is preparing a Layer 1 upgrade for 2026, which will increase transaction speeds by a factor of 50. At a community event in Tokyo on February 8, Input Output and Cardano founder Charles Hoskinson explained the plan for Ouroboros Leios, including a roadmap, target metrics and the ambition to deliver scaling without sacrificing decentralization and security.
Cardano will scale in 2026
Michael Smolenski, Product Manager for Cardano Core at Input Output, explained the initial situation:
“Our stake pool operators need to cover the cost of their operations from transaction fees rather than block rewards over the long term, and to do that they need network usage of around 50 transactions per second. So obviously we can’t stay where we are – at 10 transactions per second. We have to move forward.”
As a Layer 1 upgrade, Leios is intended to bring the throughput in the first mainnet version to 500 transactions per second: “With Leios we are achieving a 50-fold improvement in network capacity in the first release on the mainnet – we are going from 10 transactions per second to 500 transactions per second. But we are not stopping there. This is just the beginning.”
Smolenski announced a gradual scaling in order to slowly bring the infrastructure of the stake pools up to increasing requirements: a jump from 10-15 TPS to 10,000 TPS “must be done strategically”.
Instead of just emphasizing TPS, Smolenski also referred to a throughput measurement of the amount of data: the goal is “300 transaction kilobytes per second” in the first release, with a “confirmation time between 20 and 80 seconds”. The reason: Transactions and scripts have different sizes, which is why the data rate is more precise than a pure count.
From prototyping results, he deduced that at around 300 transaction KB/s, “confirmation takes between 20 and 50 seconds.” At higher speeds, the current tests show “traffic jams”; transactions would arrive later, end up in the mempool queue and therefore take longer. However, Smolenski emphasized that this is “just the first simple release” of Leios and further improvements are planned.
Smolenski named a concrete milestone in the roadmap: After research, planning, prototyping and simulations, they are “in active development” and are aiming for “the first public Leios testnet at the end of Q2”. There is no set date for the mainnet fork yet.
Hoskinson: Leios solves the trilemma
During his speech, Charles Hoskinson described Leios as the result of a long research:
“We have published more than two dozen papers and implemented dozens of protocols, and Leios is the product of more than 15 engineering firms over the years – and the product of 168 scientists over a decade, at institutions from Stanford to the Tokyo Institute of Technology.”
In terms of content, Hoskinson presented Leios not primarily as a TPS bet, but as a solution to the blockchain trilemma.
“Why Leios is special: It’s not about TPS. It’s solving the toughest problem in consensus and blockchain – the blockchain trilemma. We’re told you can only choose two: decentralization, security and scalability. This protocol is decentralized, secure and fast.”
Hoskinson also highlighted a special security mechanism that is intended as a throwback to the status quo:
“And the crazy thing is, if the protocol fails, then it fails to what we have today. It collapses back to the same protocol we use today.”
In this context, Hoskinson referred to November 21, 2025, when the Cardano blockchain experienced an unexpected fork due to a faulty transaction and resynchronized on its own: “Cardano split into two networks. And you know what it did? It came back together on its own.”
RWA tokenization is becoming a central financial instrument worldwide. BlackRock, JPMorgan, Goldman Sachs and other Wall Street addresses apparently see the Ethereum blockchain as an ideal basis for tokenization and thus for the next generation of digital financial products.
The combination of global quasi-standard, high security and interoperability makes Ethereum ideal for institutions. The financial industry has recognized that open standards are more efficient in the long term than proprietary systems.
The focus of RWA tokenization is the depiction of traditional assets, such as bonds, fund shares and real estate, as tokens of a cryptocurrency. Ethereum has established itself as the preferred system because it already offers a wide range of compliance tools, institutional interfaces and technical standards.
Projects like JPMorgan’s Onyx platform and BlackRock’s tokenized funds show how deeply the technology is already integrated into existing financial processes. For banks and asset managers, this means a significant reduction in operational costs, faster processing processes and more transparency throughout the entire life cycle of a financial product.
Importance for the DACH region
This development is particularly relevant for Germany, Austria and Switzerland. The DACH region is one of the world’s most active markets for regulated digital assets. Germany has created a clear legal framework for blockchain-based securities with the Electronic Securities Act (eWpG) of June 3, 2021, while Switzerland offers one of the most advanced regulatory standards with the DLT Act.
If global financial giants de facto establish Ethereum as an infrastructure standard, albeit without much notice and rather through the back door, this will strengthen the position of the DACH region as a European center for tokenized financial products.
At the same time, it increases pressure on local banks to launch their own tokenization programs in order to remain internationally competitive.
An industry facing structural change
The increasing institutional use of Ethereum marks a profound shift that goes far beyond short-term market movements. While cryptocurrencies are usually associated with high volatility, tokenization shows that blockchain technology has long since arrived at the core of the financial world.
Image created with ChatGPT-AI (DALL E)
Wall Street’s more or less tacit decision to bet on Ethereum could prove to be a growth engine for the next stage of the crypto market’s development. This is a clear signal for investors in the DACH region: the fusion of traditional financial markets with decentralized technologies is coming much faster than expected. And Ethereum is at the center of development.
Turkey and Tether are currently taking action against organized crypto crime, with investigators focusing on illegal digital gambling, unlicensed payment service providers and commercial money laundering.
They are said to have misused cryptocurrency to conceal financial flows for years. The authorities speak of “systematic operations” at national and international levels.
Of particular note is a single operation in which more than $500 million in digital assets were frozen. The investigators identified wallets, bank accounts, real estate and company investments that belong to a network that extends beyond national borders.
At the center are two Turkish citizens who are accused of running illegal betting offices and setting up parallel, equally illegal payment infrastructures. Authorities believe these structures have moved massive amounts of dollars in USDT over the years to conceal transactions and circumvent government controls.
Tether as a global investigative partner
Tether played a central role in the long-planned operation. The stablecoin issuer confirmed that it actively supports the Turkish authorities and freezes wallets as soon as there is sufficient initial suspicion of a crime. Turkey is now one of the largest “clients” in Tether’s global investigative cooperation with national law enforcement authorities.
According to its own information, the company has frozen more than 3.4 billion dollars worldwide and accompanied over 1,800 cases in 62 countries. The collaboration shows how strongly Tether is now committed as an operational partner in the fight against money laundering.
For Turkey, this cooperation is part of the tools to track international payment flows that would be difficult to record using traditional banking systems.
At the same time, the authorities are intensifying their measures against illegal gambling, which is considered one of the main drivers of unofficial crypto payment networks. For example, the Darkex platform was blocked, while investigators simultaneously took action against operating structures that were said to have used cryptocurrencies to camouflage stakes and payouts. Authorities emphasize that these networks not only cause economic damage, but also have links to serious organized crime.
Insecure cantonists
The latest measures are part of a strategy that has been intensified following Turkey’s removal from the FATF Gray List. The FATF Gray List is an official classification of the Financial Action Task Force (FATF)which highlights those countries that have shortcomings in combating money laundering and terrorist financing – but at the same time are ready to address these shortcomings.
These countries are under increased scrutiny and must implement a binding reform plan. The FATF regularly publishes progress reports and checks whether the measures are effective.
A country on the gray list is not considered a high-risk state, but is considered a problem state with conditions. This has concrete consequences: international banks, payment service providers and financial institutions have to check transactions from these countries more strictly. This leads to higher compliance costs, delayed payments and sometimes limited access to global financial markets.
Türkiye with Tether against the crypto mob
Turkey was removed from the list in 2024, but on the condition that reforms were carried out. At the same time, the deletion meant that Turkey demonstrated continued enforcement of anti-money laundering rules. This is the background to the current sweeping attack against organized crypto crime.
The Erdogan regime is signaling that it does not want to fundamentally restrict cryptocurrencies, but does want to take consistent action against misuse. The current investigations show that Turkey is prepared to attack large and internationally networked structures – and is thus sending a clear signal to the entire industry.
Bernstein calls the current Bitcoin drawdown the “mildest” bear case to date and is sticking to the price target of $150,000 by the end of 2026.
According to Bernstein, there is no systemic break, but rather a “homemade” crisis of trust.
Bernstein is sticking to his medium-term outlook despite the recent Bitcoin crash. In a note to clients on Monday, analysts led by Gautam Chhugani described the current drawdown as the “mildest” bear case in Bitcoin history and confirmed their price target of $150,000 by the end of 2026.
Bernstein interpreted The ongoing downward trend is not seen as a structural problem, but above all as a psychological effect. “What we are experiencing is the weakest Bitcoin bear case in its history,” writes Chhugani. Unlike in previous cycles, there was no discernible dominant trigger that would have damaged the system itself: no major implosions like FTX or Terra/Luna, no hidden leverage, no systemic rupture.
Bitcoin forecast for 2026 remains in place
Chhugani describes the situation as a homemade crisis of trust within the community. “The Bitcoin community is producing a self-imposed crisis of trust. Nothing has exploded, no bodies will fall from the closet. The media is back to write an obituary,” the note continued.
Bernstein anchors this classification in an environment that, from the house’s perspective, is significantly different from previous bear markets: a pro-Bitcoin US president, institutional demand via spot Bitcoin ETFs, growing corporate treasury holdings and the stronger presence of large asset managers. For Bernstein, the interaction of these factors is the reason why the current phase is not seen as a break in the adoption narrative, but rather as a temporary “crisis of trust”.
A key point for the bears: Bitcoin has underperformed gold in recent macro-driven volatility. However, analysts argue that Bitcoin continues to trade primarily as a liquidity-sensitive risk asset – not a mature safe haven like gold. In an environment of tight monetary policy and high interest rates, profits would have been concentrated in selected areas such as precious metals and AI-related stocks.
According to Bernstein, the market infrastructure has continued to improve in recent months, preparing it for the next liquidity stimulus. ETFs and company purchases are intact and could – as soon as the sales momentum subsides – resume buying pressure and act as a demand buffer. This is an essential building block for the $150,000 scenario by 2026.
Bernstein also rejects the theory that Bitcoin will lose relevance in an AI-dominated economy. Chhugani sees more of a tailwind in the context of an increasingly “agentic” digital environment: blockchains and programmable wallets are predestined to provide global, machine-readable financial rails – while traditional banking could come under pressure in this transition.
On Quantum Risk, Bernstein acknowledges that future cryptographic threats require preparation. What is crucial, however, is that Bitcoin is not uniquely exposed here: critical digital systems face similar challenges and would migrate together towards quantum-resistant standards. Bernstein cites the transparency of the code base as an advantage as well as the increasing involvement of large, well-capitalized players such as Strategy, who could support adjustments.
Bernstein also addresses the concern that forced sales by leveraged corporate treasury firms and miner capitulation could trigger massive selling pressure. However, the research team believes that large Bitcoin holders have structured their liabilities to survive longer drawdowns. Chhugani explicitly refers to a statement from Strategy: Only if Bitcoin falls to $8,000 and stays there for five years would the balance sheet have to be restructured.
Bernstein also sees less pressure on miners than in previous phases. The analysts argue that miners have diversified their business models and can cushion costs on the side by aligning capacities more closely with the demand of AI data centers.
Against this backdrop, Bernstein concludes that the risk of forced selling has “materially” decreased – and that the current weakness, despite its signaling effect on sentiment, does not change the medium-term price target of $150,000 by the end of 2026.
Germany is once again a destination for international capital flows. Due to institutional demand, $87 million flowed into German crypto funds in a short period of time.
This is a clear sign of the stabilization of the European crypto market after a turbulent phase of negative volatility swings.
In recent months, Europe has again developed into the largest crypto market in the world, supported by the legally secure regulation by the MICARinstitutional infrastructure and an active retail base.
Measurable recovery
According to Chainalysis, Europe reached $234 billion in transaction volume in December, the highest in months. Germany is the most active market.
The company had growth of 54 percent year-on-year and is benefiting from a growing number of international providers who are expanding into Germany due to the regulatory framework and the established financial infrastructure.
Against this background, the $87 million is confirmation of a development that will make Germany an EU crypto hub.
The capital inflows can be attributed to several factors. The prospect of falling US interest rates is making institutional investors more willing to take risks. At the same time, the European MiCA regulation creates a level of legal certainty that is recognized worldwide.
Germany is a pioneer here, as many of the rules were established long before MiCA. In recent years, BaFin has created an infrastructure that makes it easier for institutional investors to access digital assets.
There is also a strong custody and trading infrastructure, for example through Börse Stuttgart Digital or specialized custodians that meet international standards.
Crypto hub Germany
The $87 million is primarily an expression of the demand for Bitcoin products. Globally, Bitcoin ETPs have recently seen inflows of over $900 million, and Germany is following this trend.
Ethereum, on the other hand, remains under pressure as US products continue to shrink, and this is also affecting European markets. XRP and Solana, on the other hand, are also strong, but traditionally play a smaller role in Germany than Bitcoin-based products.
Germany also benefits from structural advantages that stand out in comparison to other European countries. The tax treatment of private crypto profits with a one-year holding period creates an attractive framework for long-term investors.
Strong banking system
Image created with ChatGPT-AI (DALL E)
At the same time, Germany has perhaps the strongest banking system in Europe, which is increasingly cooperating with regulated crypto custodians. This combination of legal certainty, infrastructure and market size makes Germany the preferred destination for institutional capital.
The current market stabilization is not just a technical signal, but rather an expression of a “TradFi-DeFi cooperative” that will shape the European crypto market in the long term. For Germany this means:
Demand for regulated crypto products continues to rise, and Germany is solidifying its position as one of the most important global locations for digital assets.
The Bitcoin crash looks like a TradFi impulse surrounding BlackRock’s IBIT and the derivatives around it.
There are three main theories with a large IBIT holder, a dealer hedging from structured IBIT products and a multi asset deleveraging reinforced by short gamma.
The Bitcoin crash on February 5th continues to generate widespread speculation about the true cause of one of the sharpest crashes in the market’s history. What is remarkable, however, is the clarity about the direction from which the crash originated. This time it doesn’t seem to be the typical scapegoats: no OG Bitcoin whales and no leverage squeeze on the futures market.
Three explanations are currently making the rounds. And they all end up with the same name: BlackRock’s Spot Bitcoin ETF.
Theory 1: A large holder of BlackRock’s Bitcoin ETF
Parker White (CIO, DeFi Dev Corp) looks at the raw numbers first. On February 5, IBIT’s daily turnover shot to a record level: $10.7 billion, almost double the previous peak. At the same time, around 900 million US dollars in option premiums were implemented, also an all-time high for IBIT.
As CNF reported, one point in particular makes Parker suspicious: Bitcoin and Solana fell almost in lockstep, even though SOL otherwise likes to play “beta” and not fall 1:1. And liquidations on typical crypto exchanges were “relatively low” in comparison. To White, this smacks of stress outside the usual crypto casino.
The trigger could be a large IBIT holder, perhaps a hedge fund that trades IBIT options and then ran into trouble. Parker points to the 13F reports, in which funds can be found that are almost entirely based in IBIT. This can concentrate margin risks: if it goes wrong, it goes really wrong. He also throws in a striking observation: many of these single-asset funds are based in Hong Kong.
His suspicion: An Asian hedge fund was completely liquidated after a gold/silver positioning also slipped into deep red (silver also fell sharply on February 5th). Thus, one or more non-crypto-native HK funds may have fallen into a balance sheet trap via leveraged, far out-of-the-money IBIT (“ultra high gamma”) calls, possibly with yen funding.
Theory 2: Dealer hedging due to structured IBIT products
Arthur Hayes (Ex-BitMEX CEO) is less about detective work, more about mechanics. His take: Banks and dealers may have sold Bitcoin or Bitcoin-like exposure to hedge risks from structured notes linked to spot Bitcoin ETFs like IBIT.
Hayes wrote via I will compile a complete list of all securities issued by banks to better understand the triggers for rapid price rises and falls. As the rules of the game change, you too must adapt.
Theory 3: Multi-asset deleveraging meets short gamma/basis trade
Jeff Park (CIO at ProCap, Bitwise advisor) has another Viewpoint. To him, the whole thing seems like a risk shock in the capital market that dragged Bitcoin into it, and then derivatives plumbing did the rest.
He also mentions IBIT as an anomaly but makes it clear: the imbalance was driven more by puts than by calls.
Another component comes from the prime brokerage environment: According to a note from Goldman’s PB, February 4th was one of the worst days for multi-strategy funds, a Z-score of 3.5, an event that occurs extremely rarely. When something like this happens, risk managers at pod shops don’t become sensitive. Then it’s time to de-gross, immediately, broadly, without much discussion. And that could explain why things got so ugly the following day.
Park highlights an anomaly that doesn’t fit well with a simple “ETF outflows” story. With a BTC drop of 13.2%, he would have expected historically significant net redemptions – more like $500 million to $1 billion.
Instead, IBIT saw net creations: around 6 million new shares, more than $230 million in additional AUM, and the rest of the ETF spectrum also had inflows. For Park, this is a signal: the move came more from the paper money complex – dealer/market maker/derivatives – than from a final capital withdrawal.
His theory is a cascade: Risk assets suddenly correlate at an unhealthy level → Multi-asset portfolios delever, including hedged BTC risks → Short gamma strengthens the move → Market makers have to sell IBIT or short BTC synthetically → Inventory builds up, and that dampens the outflows that one would have expected.
He cites the CME basis as an indication: the near-dated basis jumped from 3.3% on February 5th to 9% on February 6th. For him, this could mean that major players have forcibly exited the base trade.
Park is pretty clear about what he doesn’t believe: that this was just a continuation of old deprivations. And he also sees “holes” in the HK/JPY carry story. His main point is simpler: It doesn’t have to have been anything fundamental. It may have simply been the technical stuff – multi-asset de-risking, and then derivatives plumbing that reflexively escalates.
The trained economist Piero Cipollone has been chairman of the “Digital Euro” task force at the ECB since 2023, chairman of the Euro Retail Payments Board and chairman of the Euro Cyber Resilience Board for pan-European financial market infrastructures at EEuropean Zinterbank.
Am 6. February he gave an interview to the Cyprus News Agency in which he discussed the ECB’s progress with the digital euro and explained its particular importance for small states like Cyprus.
The interview with Piero Cipollone was von Thalia Neophytou for the Cyprus News Agency led. The publication comes with the kind permission of the European Central Bank.
The idea of a digital euro has raised many questions across Europe. Can you explain why the ECB is moving forward with this and what practical implications it could have for citizens, households and businesses?
First of all, I would like to clarify that we have not yet issued the digital euro and will not do so until the relevant legislation is in place.
We think the introduction of the digital euro is a good idea – especially for citizens. It preserves their freedom to pay with money issued by their central bank – their money. And today, cash cannot be used in many cases, such as when paying online. The digital euro would make it possible to use the advantages of cash even in those use cases where central bank money cannot currently be used. In short: With the digital euro we are creating a digital version of cash.
For citizens, the biggest advantage is simplicity. With a single device you can pay anywhere in Europe, for any use case – it’s easy and gives you the freedom to pay the way you want. For companies, especially small businesses, which form the backbone of the Cypriot economy, the digital euro will help save costs. Because the costs of accepting digital payments will be significantly lower with the digital euro than they are today.
If citizens already pay digitally using private mobile wallets, why do we need a central bank digital currency?
Mainly because the market is very fragmented. If you want to cover all needs, you need multiple devices or applications. Some don’t work online, some don’t work in store – and you have to carry everything with you to be able to pay in all situations. The digital euro will provide a single instrument to pay anywhere. There are additional features that do not exist today – for example, an offline feature that allows payments with digital euros even when there is no electricity or no internet connection.
To answer your question, we need it because of its simplicity and its coverage of all online use cases as well as additional offline use cases. This is very beneficial for consumers.
I would like to add that we sometimes talk too much about consumers, but we should not forget that consumers are citizens too – and as citizens we should all be concerned about the resilience of the payment methods we use.
Currently, almost 70% of card-based transactions are processed by non-European companies. This concerns resilience – we hear about strategic autonomy and resilience everywhere, and yet we rely predominantly on non-European companies for something as basic as payments. As European citizens we should be concerned about this. With the digital euro we solve this problem.
Why is a digital euro relevant for a small, bank-based economy like Cyprus?
It will be particularly beneficial – especially for Cyprus. Today you have to use non-European means of payment. And that’s not free. Accepting payments through international card systems is expensive, especially for smaller merchants. We can estimate that it is three to four times more expensive for small businesses than for large retailers.
The digital euro would significantly reduce these costs as the ECB will not charge system fees. So we reduce transaction costs and the traders benefit. In addition, the existence of an alternative digital payment option gives smaller retailers more negotiating power compared to private providers. This is competition in practice.
Why is the ECB moving forward now while other central banks have postponed or even abandoned their plans?
First of all, it’s not clear that everyone else has abandoned or postponed their plans. That depends on the respective central bank. But what is important is that we look at ourselves and consider our own needs. The ECB is responsible for providing means of payment in Europe and ensure the resilience and reliability of the payment system.
We must ask ourselves: Are these conditions met in Europe today? As already mentioned, the situation is currently so fragmented that these conditions are not always met. These are the needs we have in Europe – and we must act now.
If we waste time thinking about what others are doing, our dependence on non-European payment providers will continue to grow and we will end up worse off.
Where are we currently with the introduction of the digital euro, and what are the next milestones?
There are two dimensions: the internal one – the preparatory dimension for which the ECB and the Eurosystem are responsible – and the legislative one.
We are making good progress on the legislative side. The European Commission’s initial proposal was published in June 2023.
Last December, the Council of the European Union reached an agreement that was very close to the Commission’s original position. Now we are waiting for the European Parliament’s decision.
According to the current timetable, Parliament should be able to adopt a position in May and we know that MPs are actively discussing the amendments. Hopefully we will have a position from Parliament by May. Then negotiations can begin and hopefully we will have legislation by the end of the year.
We are already working to be prepared so that we can issue the digital euro by mid-2029 if legislation is available. In the meantime, we will start a pilot project in 2027 – this means that we will then make the first payments on a test basis.
But we have to wait until 2029 for the currency to be released?
Look at it this way: the time it takes us to produce the infrastructure and be ready to spend it is equal to the time it takes the legislature to pass legislation.
Image created with ChatGPT-AI (DALL E)
Banks have expressed concerns that the digital euro could affect their liquidity through deposit outflows. How is the ECB dealing with this?
We’ve been thinking about this since the beginning of the project. Bank stability is a key concern for the ECB, as our monetary policy is transmitted through the banks. We therefore built in protective mechanisms from the start.
Firstly, the digital euro does not bear interest. So there is no incentive to move money from the bank account to the digital euro wallet.
Secondly, you do not need to have money in your digital Euro wallet to make a payment as we are introducing a so-called “waterfall solution”. In simple terms, this means: When you make a payment with digital euros, the money is automatically retrieved from your bank account, loaded into the wallet and transferred from there to the recipient. You don’t need to pre-load the wallet.
Does this apply online or offline?
Online – that will be the bigger use case. Of course, for offline payments you must have the money in your wallet beforehand.
Third, there will be holding caps.
And fourthly, only natural persons can hold digital euros, not legal entities. This also reduces demand. We have run simulations and even with relatively high holding caps, we do not see any financial instability.
This is public knowledge. We published a report and sent it to the European Parliament which shows this clearly. Financial stability is not at risk.
What will the holding cap be?
We don’t know that yet. This still needs to be discussed. There is a robust process for this, involving the European Central Bank, the European Commission and the Council.
It will be a comprehensive, clearly defined process that ensures that no one can decide to change the holding cap in the short term. The focus is exactly on the point you raised: ensuring financial stability.
In addition to financial stability, trust is crucial to the success or failure of the project. What guarantees can you give citizens regarding data protection and data security?
We built the entire project around the topic of data protection. Why? Because at the beginning of the process we examined people’s expectations. We heard two things: privacy and data security. These were the most important concerns.
We have designed the system accordingly. How do we ensure data protection is guaranteed? We will not have any personal data for the online application. We won’t know who is paying who. All the ECB sees are encrypted codes representing payers and payees – but we cannot identify the people behind them. The information remains with the banks, similar to today. The ECB will not know any data. This applies to the online application.
For the offline application, only the payer and the payee know the transaction details as the real money transfer takes place between their devices. This is the highest level of data protection possible with current technology. We move at the technological frontier and implement the applications as soon as they are available.
A question about monetary policy: The euro has appreciated against the dollar. Does this give the ECB more leeway to cut interest rates, or does the exchange rate not play a role in the decisions?
We do not have a specific exchange rate target. Of course, we take the exchange rate into account as an input in our projections. It is one of the many factors we use to forecast inflation dynamics. We’ll see what the new projections turn out and what impact that will have.
The euro appreciated at the beginning of 2026. It has been hovering around $1.18 and $1.17 for almost a year. After the event we saw a few weeks ago, it is now back to the level of previous months.
The current crypto market collapse has dragged down the Bitcoin price, but paradoxically triggered an unprecedented boom in the derivatives market. Particular focus is on BlackRock’s spot Bitcoin ETF, whose options trading achieved record turnover.
Bitcoin fell by double digits, but over two million IBIT options were traded – leaving even experts speechless. Since then there have been two factions. One says the heavy options trading was a response to the crash, the other says the options market itself caused the crash.
The CoinDesk report that began the current debate describes a trading day that has never before been observed in this form. The BlackRock ETF IBIT recorded an all-time high in options volume, while at the same time the ETF price and the Bitcoin spot price came under massive pressure.
What was particularly noticeable was the dominance of put options, which indicates a wave of hedging by institutional investors. The unusually high premiums and strong demand for protection instruments suggest that major market participants saw significant risks.
At the same time, the structure of the options traded suggests that not only classic hedging strategies were in play. Several analysts point to the Role of market makerswho have to adjust their delta hedges when prices fall sharply. This mechanism can increase selling pressure if traders are forced to sell additional futures or spot positions to stabilize their balance sheets.
Causes dispute in full swing
The interpretations could hardly be further apart: BitMEX founder Arthur Hayes argues that structured products on Bitcoin ETFs played the central role. Banks that issue such products must adjust their hedging in response to certain price movements. If the market slips into a negative gamma zone, this can lead to a self-reinforcing downward spiral. Hayes sees this rare mechanism as the cause of the crash.
Other analysts disagree: The crash had already begun and options activity was simply a response to increased volatility. Ergo, the record sales are a symptom, not the trigger. There were simply too many investors who sought protection at the same time when the market came under pressure.
Image created with ChatGPT-AI (DALL E)
A third, albeit much smaller, group points to external factors, particularly leveraged funds from Asia. They built up large positions using cheap yen financing, which had to be liquidated when financing costs rose and prices fell. The resulting margin calls may have increased selling pressure.
What the case reveals about the new market structure
Regardless of the reason, the incident shows how much the BTC market structure has been changed by the introduction of large spot ETFs. The options market surrounding these products is no longer a fringe phenomenon, but a powerful element in price formation. The combination of structured products, delta hedging and global carry trades makes the market more vulnerable than before to abrupt movements – and at the same time increases the importance of the derivatives market as an early warning system.
The crash and the record sales in IBIT options trading are therefore a turning point. It shows that Bitcoin has long since arrived at the center of complex institutional strategies – and that these strategies can significantly influence the market in both directions.
