EU Establishes Capital Requirements for Stablecoin Issuers

<p>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.</p><p>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.</p><p>Key to the proposed regulations is the requirement
for issuers to maintain <a href="https://www.financemagnates.com/terms/l/liquidity/">liquidity</a> for the reserve of assets that back the
<a href="https://www.financemagnates.com/tag/stablecoin/" target="_blank" rel="follow">stablecoin</a> reserves. These assets must meet specific criteria, ensuring their
quality, and only eligible assets of high enough quality can be utilized. </p><p>UK Takes Lead in Regulating Stablecoins</p><p>The primary goal of the new requirements is to align
with <a href="https://www.financemagnates.com/tag/mica/" target="_blank" rel="follow">Markets in Crypto-Assets Regulation</a> (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.</p><p>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.</p><blockquote><p lang="en" dir="ltr">➡️Supervisory Colleges: <a href="https://t.co/tdowUCP3fT">https://t.co/tdowUCP3fT</a>➡️Reporting of transactions with asset-referenced tokens and e-money tokens denominated in a non-EU currency: <a href="https://t.co/9YVAsHS2n5">https://t.co/9YVAsHS2n5</a>➡️Own funds requirements and stress testing of issuers: <a href="https://t.co/2f0ZtUarFJ">https://t.co/2f0ZtUarFJ</a></p>— EU Banking Authority – EBA