Stablecoin

Impact

<p>The post <a href="https://coinpedia.org/news/banking-regulator-seeks-revised-criteria-for-stablecoin-risk-assessment/">BCBS Cracks Down, Seeks Revised Criteria for Stablecoin Risk Assessment&nbsp;</a> appeared first on <a href="https://coinpedia.org">Coinpedia Fintech News</a></p> 
<p>In a significant move, the <a href="https://coinpedia.org/crypto-live-news/basel-committee-proposes-cryptoasset-measures-to-mitigate-bank-risks/">Basel Committee for Banking Supervision (BCBS)</a> is set to redefine how stablecoins are perceived in the dynamic world of crypto. This comes at a crucial time when crypto, including stablecoins, is navigating through SEC regulations and manipulative challenges.</p> 
<h2 class="wp-block-heading" id="h-what-s-the-bcbs-s-plan-for-stablecoins">What’s the BCBS’s Plan for Stablecoins?</h2> 
<p>In a recent <a href="https://www.bis.org/press/p231214.htm">document</a>, the global banking regulator revealed plans that mark a shift in how stablecoins’ risk, compared to volatile assets like Bitcoin, is determined. The goal is simple – to align stablecoins more closely with traditional assets and balance the current preferential treatment they receive.</p> 
<p>Presently, the BCBS maintains a strict stance on cryptocurrencies, recommending a staggering maximum risk weight of 1,250% for free-floating digital assets like <a href="https://coinpedia.org/price-prediction/bitcoin-price-prediction/">Bitcoin</a>. This necessitates that banks allocate substantial capital to match their exposure to these riskier assets. Yet, the Committee had previously granted preferential Group 1b regulatory treatment to stablecoins due to their perceived “effective stabilization mechanisms.”</p> 
<p>Read More: <a href="https://coinpedia.org/price-analysis/bitwise-has-outlined-bitcoin-price-trajectory-for-2024-expects-price-surge-to-80k/">Bitwise Outlines Top Reasons Why Bitcoin Price Will Hit $80k in 2024</a></p> 
<h2 class="wp-block-heading" id="h-change-is-the-only-constant">Change is the Only Constant! </h2> 
<p>However, things are changing. <a href="https://coinpedia.org/news/are-stablecoins-saving-the-u-s-treasury-market/">Stablecoins</a> are about to face a stricter set of criteria to keep their special treatment. The most crucial requirement is continuous redemption availability, ensuring stablecoins can be redeemed at all times. This highlights the importance of solid redemption rights and governance, stating that only stablecoins from regulated entities meeting stringent standards will get favorable risk treatment.</p> 
<p>These changes matter for banks, potentially altering how they categorize and allocate capital for stablecoins. The ultimate aim is to bring stablecoins closer in risk weight to traditional assets within the well-known Basel Framework. While these changes don’t affect the strict requirements for assets like Bitcoin, they show a clear move toward a more careful evaluation of stablecoin risk.</p> 
<p>Also Read: <a href="https://coinpedia.org/news/stablecoin-surge-7t-global-volume-rivals-visa-mastercard-51-latin-americans-shop-with-crypto/">Goodbye to Banking? Stablecoin Global Volume Reaches $7 Trillion!</a></p> 
<h2 class="wp-block-heading" id="h-what-next">What Next?</h2> 
<p>In essence, the BCBS remains focused on ensuring stablecoins meet strict regulatory standards, earning the right to preferential treatment. This move aims to align stablecoins more closely with traditional assets, introducing a new level of accountability in banking regulations.</p>

BCBS Cracks Down, Seeks Revised Criteria for Stablecoin Risk Assessment

Table of Contents

CoinPedia News

Other articles published on Dec 14, 2023

Chainlink surges by 4% in 24 hours – Time for a new price prediction?

Gemini Earn creditors face potential 70% cut in crypto payouts

Philippines SEC Takes a Bold Step in Crypto Regulation

Gensler Dodges Crypto Questions After Treasury Market Meeting

How To Create A Cryptocurrency: Ultimate Guide

Cathie Wood’s Ark Invest sells another $42.6m Coinbase shares, $1.6m in GBTC

Join our free newsletter for daily crypto updates!