The goal of the brand new liquidity pointers is to make sure that the stablecoin might be rapidly redeemed even throughout turmoil market situations to keep away from the danger of any financial institution runs and contagion in a disaster state of affairs.
Beneath the proposed liquidity pointers, stablecoin issuers should supply any stablecoin backed by a forex that’s absolutely redeemable at par to buyers. The official proposal by EBA famous that the stablecoin liquidity pointers will act as a liquidity stress take a look at for stablecoin issuers.
EBA believes the stress take a look at will spotlight any shortcomings and lack of liquidity for the stablecoin, which will help EBA to solely approve absolutely backed stablecoins with sufficient liquidity buffer.
“The liquidity stress testing will assist issuers of tokens to higher handle their reserve of belongings and usually their liquidity danger. Primarily based on the end result of the liquidity stress testing, the EBA or, the place relevant, the related competent authority/supervisor, might resolve to strengthen the liquidity necessities of the issuer,” the official proposal learn.
As soon as accepted, the proposal is ready to return into impact from June to early subsequent 12 months. After implementing the rules, the authorities can have the ability to strengthen the liquidity necessities of the related issuer to cowl these dangers based mostly on the end result of the liquidity stress testing.
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The proposed liquidity guidelines are aimed toward issuers of stablecoins, which might be non-bank establishments, meet the identical safeguards, and keep away from unfair capital or liquidity benefits over banks. At present, the proposal is within the session section, the place the frequent public can provide their enter. The general public session section is open for 3 months till a public listening to is scheduled on Jan. 30, 2024.
European Banking Authority (EBA), the banking watchdog of the European Union (EU), proposed a set of recent pointers for stablecoin issuers that can set minimal capital and liquidity necessities.
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