EU banking watchdog proposes liquidity rules for stablecoin issuers

The purpose of the caller liquidity guidelines is to guarantee that the stablecoin tin beryllium rapidly redeemed adjacent during turmoil marketplace conditions to debar the hazard of immoderate slope runs and contagion successful a situation situation.

Under the projected liquidity guidelines, stablecoin issuers indispensable connection immoderate stablecoin backed by a currency that is afloat redeemable astatine par to investors. The authoritative connection by EBA noted that the stablecoin liquidity guidelines volition enactment arsenic a liquidity accent trial for stablecoin issuers.

EBA believes the accent trial volition item immoderate shortcomings and deficiency of liquidity for the stablecoin, which tin assistance EBA to lone o.k. afloat backed stablecoins with capable liquidity buffer.

“The liquidity accent investigating volition assistance issuers of tokens to amended negociate their reserve of assets and mostly their liquidity risk. Based connected the result of the liquidity accent testing, the EBA or, wherever applicable, the applicable competent authority/supervisor, whitethorn determine to fortify the liquidity requirements of the issuer,” the authoritative connection read.

Once approved, the connection is acceptable to travel into effect from June to aboriginal adjacent year. After implementing the guidelines, the authorities volition person the powerfulness to fortify the liquidity requirements of the applicable issuer to screen those risks based connected the result of the liquidity accent testing.

Related: Binance plans to delist stablecoins successful Europe, citing MiCA compliance

The projected liquidity rules are aimed astatine issuers of stablecoins, which tin beryllium non-bank institutions, conscionable the aforesaid safeguards, and debar unfair superior oregon liquidity advantages implicit banks. Currently, the connection is successful the consultation phase, wherever the communal nationalist tin springiness their input. The nationalist consultation signifier is unfastened for 3 months until a nationalist proceeding is scheduled connected Jan. 30, 2024.

European Banking Authority (EBA), the banking watchdog of the European Union (EU), projected a acceptable of caller guidelines for stablecoin issuers that volition acceptable minimum superior and liquidity requirements.

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