The Basel Committee on Banking Supervision, a regulatory body comprised of central banks and financial authorities, has proposed measures to adjust its standard on banks’ exposure to cryptoassets. The committee published a consultative document on its website, outlining proposed changes to the prudential standards for stablecoins.
The proposed changes primarily focus on the composition of reserve assets for stablecoins, specifically those classified under Group 1b in the prudential standards. The committee suggests introducing a maximum maturity limit for individual reserve assets to address redemption risks during periods of extreme stress.
In order to allow longer-term assets as reserve assets, the committee believes they must overcollateralize the claims of stablecoin holders. This means that the amount of extra collateral should be sufficient to offset potential decreases in asset values, ensuring that the stablecoin remains redeemable at its pegged value even in challenging and volatile markets.
The document also highlights the importance of credit quality in selecting reserve assets for stablecoin issuers. It suggests a list of high credit quality assets, including central bank reserves, marketable securities guaranteed by sovereigns and central banks, and deposits at high credit quality banks.
The committee is seeking feedback on the proposed amendments until March 28, 2024. Regardless of any amendments, the prudential standards for stablecoin exposures are set to be implemented on January 1, 2025.
This latest proposal follows a previous consultation paper issued by the Basel Committee in October 2023, which outlined requirements for banks to provide quantitative data on their exposures to crypto assets and corresponding capital and liquidity requirements.
This News Article was automatically generated by Bob the Bot (AI)
| Information | Details |
|---|---|
| Geography | Global |
| Countries | |
| Sentiment | neutral |
| Relevance Score | 1 |
| People | None |
| Companies | Basel Committee on Banking Supervision, Bank for International Settlements (BIS) |
| Currencies | None |
| Securities | None |
