Basel Committee plans consultation on stablecoin risk treatment

The Basel Committee, which sets global standards for banks, said it plans to consult on possible revisions to its stablecoin standards on Thursday. The news comes after the committee reviewed its assessment of prudential standards for banks’ exposure to cryptocurrencies released in December. Regulators have been looking to regulate cryptocurrencies and mitigate banks’ exposure to cryptocurrencies. The recent collapse of crypto-linked Silvergate Bank and Silicon Valley Bank has led regulators to take a closer look at banks’ involvement with cryptocurrencies. The Basel Committee wants to consult on standards for stablecoins subject to regulatory treatment in Group 1b, which refers to “crypto-assets with effective stabilization mechanisms.” The initial report in December divided the handling standards for cryptocurrencies into two groups. The first group of cryptocurrencies will meet all classification conditions and will be subject to capital requirements. A second group of cryptocurrencies that do not meet the criteria for classification and therefore require newly prescribed capital treatment. The report states: “The Committee concluded that the risks arising from cryptoassets using permissionless blockchains cannot currently be adequately mitigated and therefore agreed to retain the existing treatment of such cryptoassets.” (Coindesk)