BIS proposes to tighten the requirements for stablecoin issuers applying for preferential regulation

Discussions and adjustments to the initiative will continue until March 2024

14.12.2023 - 13:40

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2 min

What’s new? The Basel Committee on Banking Supervision within the Bank for International Settlements (BIS) has proposed to tighten the requirements for issuers of stablecoins that interact with financial institutions and rely on preferential regulatory treatment. In particular, aspects such as the credit quality of the issuer, as well as the maturity and liquidity of the reserve assets, are proposed to be reviewed.

The BIS report

What else is known? The requirements determine whether stablecoins linked to banks will be eligible for inclusion in the Group 1b cryptoasset category and thus benefit from favorable regulatory treatment.

Specifically, the committee’s representatives believe that stablecoin reserves should consist primarily of short-term assets because they are less sensitive to market risk factors such as changes in interest rates.

In addition, reserves in general should be represented by high-quality assets such as the Central Bank’s foreign exchange reserves, bonds, and deposits with regulated banks.

As part of the initiative, financial institutions will also be required to conduct their own due diligence to confirm that stablecoins are indeed capable of maintaining a stable peg to the value of the underlying asset.

The initiative proposed by the BIS is open to adjustments until March 2024.

BIS представил проект анонимной CBDC

В рамках проекта создано два прототипа, один из которых делает больший упор на конфиденциальность, второй — на безопасность

The BIS has previously conducted its own research, which concluded that none of the stablecoins on the market, including the largest, Tether’s USDT and Circle’s USDC, can permanently maintain a peg to the underlying asset or be redeemed in full.

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