The European Union’s banking watchdog has introduced
rules for the regulation of cryptocurrency and stablecoin markets. The European
Banking Authority (EBA) has proposed minimum capital and liquidity requirements
for issuers of stablecoins and other digitized tokens.
The EBA’s proposal, published today (Wednesday), is
designed to ensure that issuers of stablecoins backed by currencies have
sufficient funds for investors to redeem in case of losses. This move aims to
establish a framework for the stablecoin industry and provide safeguards
against potential crises.
Key to the proposed regulations is the requirement
for issuers to maintain liquidity for the reserve of assets that back the
stablecoin reserves. These assets must meet specific criteria, ensuring their
quality, and only eligible assets of high enough quality can be utilized.
The primary goal of the new requirements is to align
with Markets in Crypto-Assets Regulation (MiCA)’s objective of monitoring and
preventing potential risks from the widespread use of asset-referenced tokens
(ARTs) and e-money tokens (EMTs) in non-EU currencies as a means of exchange.
The consultation period for these proposals extends
until February 8, 2024. Interested parties can submit their comments on the
EBA’s consultation page. Furthermore, the EBA will conduct a virtual public
hearing on January 17, 2024, to engage with stakeholders on these consultation
papers.
➡️Supervisory Colleges: https://t.co/tdowUCP3fT
➡️Reporting of transactions with asset-referenced tokens and e-money tokens denominated in a non-EU currency: https://t.co/9YVAsHS2n5
➡️Own funds requirements and stress testing of issuers: https://t.co/2f0ZtUarFJ
— EU Banking Authority – EBA 🇪🇺 (@EBA_News) November 8, 2023
MiCA, which came into effect on June 29, 2023, sets
forth a regulatory framework for the issuance and provision of crypto assets in
the EU. The provisions concerning the offering to the public and admission to
trading of ARTs and EMTs will become applicable from June 30, 2024.
UK’s Answer to Crypto Turmoil?
In February, the UK’s Ministry of Finance unveiled its
initial set of regulations for crypto assets, Reuters reported. The decision to regulate the sector followed the collapse of FTX, which resulted in substantial
losses to investors.
The rules will apply to crypto firms based in the UK
or those providing services to the UK. Such firms will be required to obtain a
license, adhere to minimum capital and liquidity requirements, and potentially
establish a physical presence in the UK, as determined by the Financial Conduct
Authority.
Presently, crypto firms are only required to
demonstrate their compliance with anti-money laundering policies. Binance, one
of the largest crypto exchanges, welcomed the public consultation, expressing
support for effective and appropriate regulation to foster the mainstream
adoption of digital assets.
The European Union’s banking watchdog has introduced
rules for the regulation of cryptocurrency and stablecoin markets. The European
Banking Authority (EBA) has proposed minimum capital and liquidity requirements
for issuers of stablecoins and other digitized tokens.
The EBA’s proposal, published today (Wednesday), is
designed to ensure that issuers of stablecoins backed by currencies have
sufficient funds for investors to redeem in case of losses. This move aims to
establish a framework for the stablecoin industry and provide safeguards
against potential crises.
Key to the proposed regulations is the requirement
for issuers to maintain liquidity for the reserve of assets that back the
stablecoin reserves. These assets must meet specific criteria, ensuring their
quality, and only eligible assets of high enough quality can be utilized.
The primary goal of the new requirements is to align
with Markets in Crypto-Assets Regulation (MiCA)’s objective of monitoring and
preventing potential risks from the widespread use of asset-referenced tokens
(ARTs) and e-money tokens (EMTs) in non-EU currencies as a means of exchange.
The consultation period for these proposals extends
until February 8, 2024. Interested parties can submit their comments on the
EBA’s consultation page. Furthermore, the EBA will conduct a virtual public
hearing on January 17, 2024, to engage with stakeholders on these consultation
papers.
➡️Supervisory Colleges: https://t.co/tdowUCP3fT
➡️Reporting of transactions with asset-referenced tokens and e-money tokens denominated in a non-EU currency: https://t.co/9YVAsHS2n5
➡️Own funds requirements and stress testing of issuers: https://t.co/2f0ZtUarFJ
— EU Banking Authority – EBA 🇪🇺 (@EBA_News) November 8, 2023
MiCA, which came into effect on June 29, 2023, sets
forth a regulatory framework for the issuance and provision of crypto assets in
the EU. The provisions concerning the offering to the public and admission to
trading of ARTs and EMTs will become applicable from June 30, 2024.
UK’s Answer to Crypto Turmoil?
In February, the UK’s Ministry of Finance unveiled its
initial set of regulations for crypto assets, Reuters reported. The decision to regulate the sector followed the collapse of FTX, which resulted in substantial
losses to investors.
The rules will apply to crypto firms based in the UK
or those providing services to the UK. Such firms will be required to obtain a
license, adhere to minimum capital and liquidity requirements, and potentially
establish a physical presence in the UK, as determined by the Financial Conduct
Authority.
Presently, crypto firms are only required to
demonstrate their compliance with anti-money laundering policies. Binance, one
of the largest crypto exchanges, welcomed the public consultation, expressing
support for effective and appropriate regulation to foster the mainstream
adoption of digital assets.
