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The Basel Committee for Banking Supervision (BCBS) has proposed exciting revisions to the criteria for allowing stablecoins to be treated as less risky than unbacked cryptocurrencies like bitcoin (BTC). This consultative document, published Thursday, is a game-changer for the crypto industry.
Last week, CoinDesk reported that the global banking regulator was aiming to rethink its classification criteria for stablecoins, which are designed to maintain their value in line with reserve assets such as the U.S. dollar. The newly released consultation lays out the proposed revisions in detail, bringing fresh opportunities for stablecoins and crypto enthusiasts alike.
The BCBS has previously taken a strict stance on crypto, recommending a maximum risk weight of 1,250% for free-floating digital assets like bitcoin. However, the exciting news is that stablecoins with “effective stabilization mechanisms” can now qualify for “preferential Group 1b regulatory treatment,” opening up new possibilities for capital requirements.
It’s important to note that stablecoins must still be “redeemable at all times” to be eligible for this preferential treatment. This ensures that only stablecoins issued by supervised and regulated entities with robust redemption rights and governance are included, as outlined by the BCBS.
This story will be updated.
Edited by Sheldon Reback.