Stablecoins Receives A Consistent Global Regulatory Treatment

A Swiss-based group that establishes international banking standards has issued fresh recommendations for banks to manage their exposure to digital assets, rescinding prior draft regulations for stablecoins.

The Basel Committee on Banking Supervision published a revised version of its proposed guidelines for banks to follow when handling digital assets, including “tokenized traditional assets, stablecoins, and unbacked crypto assets,” in anticipation of the completion of a new framework for banking standards by 2025.

The new draft allows stablecoins to be stress-tested based on whether they could be sold for a price that closely tracks its peg value and incorporates stakeholder feedback and recent developments in the cryptocurrency markets, such as the algorithmic stablecoin crash last spring.

It was advised that any testing of stablecoin exposure be done in addition to, not in substitute of, the existing regulatory capital and liquidity requirements put on traditional financial institutions.

Along with additional guidelines, such as standards for identifying whether digital assets are safer than others, banks would also be required to limit their exposure to specific tokens to less than 1% of their Tier 1 capital, which represents their fundamental equity holdings.

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