Europe to tighten regulation for issuers of stablecoins
The European Banking Authority (EBA) will tighten regulation for issuers of stablecoins
The European Banking Authority (EBA) has tightened capital requirements for companies issuing "meaningful" tokens
Stablecoin issuers whose reserves include derivatives or covered bonds will receive additional regulatory scrutiny, CoinDesk reports, citing new rules from the European Banking Authority (EBA).
The document introduces stricter capital requirements for such companies in case the tokens they issue are recognized as "significant". The functions of supervision of such companies will be partially or fully performed by the EBA, the publication writes.
"Financial problems at one issuer ART (asset-linked token. - "Soft4bro.com") or EMT (electronic money token. - "Soft4bro.com") can significantly increase the risks of difficulties at other issuers of crypto assets and other financial institutions, given the network of their contractual obligations," - noted in the text of the document.
The EBA also defined criteria for categorizing stablecoins as "significant". In particular, it is the market share in cross-border payments and the number of users.
In May, the Council of Europe adopted the Markets in Crypto-Assets (MiCA) rules for the regulation of digital assets. 27 EU member states unanimously supported the bill. The document introduces institutional regulation of cryptocurrency issuance and establishes a uniform legal regime for cryptocurrency companies within the European Union.
Under these rules, any stablecoins that are closely linked to the financial system are subject to additional capital requirements and centralized supervision by the EU.
In February, the Bank for International Settlements (BIS) reported that it would develop a monitoring system for stablecoins. The corresponding project called Project Pyxtrial will be launched by the London division of BIS.
Also, the European Union called for limiting the amount of leverage for cryptocurrency trading. The unregulated sphere of credit and margin trading on crypto exchanges can carry a threat to the traditional financial system, according to the European Council on Systemic Risk. In addition, the European Union called to tighten the rules of advertising cryptocurrencies on social networks.
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