The European Union’s banking watchdog has put cryptocurrencies under the spotlight by introducing new proposals that would require sufficient funding for issuers of stablecoins backed by fiat currencies.
Recommendation from the European Banking Authority
The European Banking Authority (EBA) shared minimum capital and liquidity requirements for issuers of stablecoins and digital tokens.
The institution has made recommendations on liquidity requirements regarding the reserves of assets supporting stablecoins, depending on the public’s attention. With this recommendation, he emphasizes the need to use high quality and suitable assets.
Stablecoin Issuers
EBA states that issuers of stablecoins backed by any currency must offer investors exactly the same amount of cash.
Regarding the issue, EBA said the following:
“Following the application of the guidelines, the supervisor may strengthen the liquidity requirements of the relevant issuer to cover these risks based on the outcome of the liquidity stress test.”
Liquidity Rules
The European Banking Authority has stated that banks may be exempt from these requirements in some cases because they already have liquidity buffers. The required liquidity rules ensure that issuers of stablecoins and cryptocurrencies meet similar safeguards and avoid unfair capital and liquidity advantages over banks.
At the beginning of the weekUK financial regulators to regulate stablecoins in first leg of UK rules for cryptocurrency world He gave advice.
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