Cryptocurrency companies Coinbase and Circle are challenging a Basel Committee on Banking Supervisory proposal to introduce stricter standards. Preferential treatment in regulations On banks’ stablecoin exposure.
The commission published a consultation paper in December suggesting that banks conduct due diligence to ensure “an appropriate understanding of the stabilization mechanisms of the stablecoins to which they are exposed.”
The proposed requirements determine whether stablecoins qualify for the “Group 1b category,” which provides preferential regulatory treatment. According to consultation document, must meet certain criteria, including low volatility and sufficient liquidity. The deadline for comments on the document was March 28.
Cryptocurrency exchange Coinbase said in comments it was disappointed with the commission’s approach. letter March 28th.
“Many of the requirements are not based on the risk of these assets to banks, but rather reflect other policy objectives that the Commission does not typically include in capital requirements,” Coinbase said.
“The Commission’s decision demonstrates its desire to severely limit banks’ holdings and use of stablecoins,” Coinbase later said in the letter.
Permissionless Blockchain
Circle issuing stablecoins USDC
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, criticized the Commission’s handling of permissionless blockchain. In its consultation report, the committee said permissionless blockchains pose “inherent risks” and will not be permitted in Group 1 at this time.
“There is a strong argument that banks should be encouraged to leverage blockchain, cryptography, mobile-enabled wallets and other open source technologies to advance their digital transformation and cybersecurity efforts,” Circle said in a March 27 commentary. letter. “As the Committee well knows, when one bank fails, trust in the bank erodes. “Nevertheless, most banks, especially small and mid-sized institutions, are unable to keep up with the competition in the digital innovation space taking place among large global banks.”
“Rather than stigmatizing blockchain-based financial services, Circle’s successful operational experience and deep partnerships with global financial institutions suggest that collaborative models and opportunities are at hand that banks can benefit from and that the Commission should encourage.” the company added.
that much Basel Committee on Banking Supervision As a global standard setter, members include the United States, Canada, and Japan.
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