Here is our pick of the 3 most important Stablecoin news stories during the week.
Fiat strikes back!
Strengthened and reinvigorated by the chaos in Crypto including stablecoins such as Terra, Asset Managers such as Celsius and Hedge funds such as Three Arrows, the Fiat ecosystem of regulators, central banks and politicians made progress on their plans to regain control of the sector this week.
Firstly the central bankers, central bank the BIS has made the proposal for limiting the banks’ total exposures to “Group 2 cryptossets to 1% of Tier 1 capital” in its consultative document titled “Second consultation on the prudential treatment of cryptoassets,” published on June 30.
Specifically, Group 2 refers to the assets that do not meet classification conditions and includes specific tokenized traditional assets and stablecoins, as well as unbacked crypto assets. As opposed to Group 2, Group 1 includes tokenized traditional assets and stablecoins that meet classification conditions.
Then the U.S. federal government which is working on stablecoin legislation with Congress announced that it could become law by the end of the year. The President’s Working Group on Financial Markets, an intergovernmental group composed of the heads of several financial regulators, met Thursday to discuss recent stablecoin activities and future legislation.
And finally, the European Union (EU) policymakers have struck a deal on landmark legislation to regulate crypto assets and service providers throughout the bloc’s 27 member nations. The policymakers, who represent the world’s third-largest economy, have been haggling for nearly two years over the Markets in Crypto Assets (MiCA) framework. The legislative package sets up requirements for crypto issuers to publish a kind of technical manifesto called a “white paper,” to register with the authorities and to keep proper bank-style reserves for stablecoins.
So in summary, this week we saw the U.S., the E.U. and BIS make progress on legislation, regulation and policy to wrangle the wild west of Crypto and stablecoins. Interestingly, this is an acceptance that this new technology and the current use cases are here to stay, just how effective these new rules will be and how they will be implemented is still to be seen.
Alan Scott is an expert in the FX market and has been working in the domain of stablecoins for many years.
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Go to Publisher: Daily Fintech
Author: Alan Scott