EU Regulator Draws Up Liquidity Rules for Stablecoin Issuers
- The EU has proposed some rules for stablecoin issuers.
- The proposed rules will undergo public consultations.
- If approved, the rules will be effective as early as next year.
As the European Union (EU) prepares to inaugurate its Markets in Crypto Assets Regulation (MiCA) regime, the bloc’s banking watchdog has proposed several rules for issuers of stablecoins and digitized tokens.
On November 8, the European Banking Authority (EBA) released a third batch of MiCA public consultations, making up part of the prudential package of the regime’s deliverables. This batch covers several topics, including capital and liquidity requirements for stablecoin issuers.
Proposed Rules for Stablecoin Issuers
Under the proposed liquidity guidelines , stablecoin issuers are mandated to offer “high-quality” stablecoins that are backed by a currency that is fully redeemable at par with investors.
According to the regulator, this provision will ensure digital assets can be quickly sold to raise cash for redemptions, even in stressed markets. This is a proactive step to ensure peg stability, as well as mitigate runs and contagion in a financial crisis.
For stablecoins backed by assets, such as gold, EBA proposes that they offer redemptions at the asset’s going market price during the redemption period.
Further, the EBA proposes regular liquidity stress-testing programs for all stablecoin issuers.
The EBA proposed that banks that issue stablecoins may be exempt from certain liquidity requirements, given that they are already compliant with enough liquidity buffers under the existing EU bank capital and liquidity rules.
The proposals will undergo public consultation over the next three months. If approved, they’ll be effective as early as June next year. However, after implementation, the rules will not be a one-size-fits-all.
The Regulator’s Discretion
According to the EBA, “competent authorities” can strengthen liquidity requirements for individual stablecoin issuers if they observe higher degree risks based on the outcome of the liquidity stress testing.
The regulator said this would ensure stablecoin issuers meet the same safeguards as bankers and avoid unfair capital or liquidity advantages over them, especially if they are non-banking institutions.
Stay updated on the latest crypto tax reporting rule adopted by the EU Council:
EU Council Adopts New Crypto Tax Reporting Rule
Read how France is preparing for MiCA:
France Prepares for MiCA with Focus on 6 Key Areas
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Skipped Bitcoin Cash? Qubetics ($TICS) Could Be Your Redemption Ticket – Top Cryptos for Significant Returns
The crypto market has been on fire lately. With the spotlight shifting to new and innovative blockchain projects, everyone’s eyes are on which cryptos will make waves this year.Bitcoin Cash: A Missed Opportunity for Significant ReturnsQubetics: Revolutionizing Digital Finance with Real-World Asset TokenizationConclusion: Time to Act on Qubetics
BTC Short Position by ETH Whale Nears $332M
A crypto whale boosts their BTC short position to $332M, facing losses and potential short squeeze risk.Whale Boosts BTC Short Position Amid Market VolatilityRisk of Liquidation LoomsStrategic Buy Orders Placed

Pakistan Launches Crypto Council Led by Finance Minister
Pakistan forms Crypto Council to boost blockchain and crypto adoption, chaired by Finance Minister Muhammad Aurangzeb.Pakistan Takes a Bold Step Toward Crypto AdoptionFinance Minister to Lead the InitiativeFocus on Innovation and Financial Inclusion

Trump Crypto Project WLFI Buys AVAX, MNT for $4M
Trump-linked crypto project WLFI buys $4M worth of AVAX and MNT, total investment hits $340M with $115M in unrealized losses.WLFI Adds AVAX and MNT to Crypto Portfolio$340M Invested Across 11 TokensHeavy Losses Despite Market Activity

Trending news
MoreCrypto prices
More








