Basel Committee Plans Consultation on Stablecoin Criteria Revisions

According to CoinDesk, the Basel Committee, a global standard-setter for banks, announced its plans to consult on potential revisions to its criteria for stablecoins on Thursday. This decision comes after the committee reviewed elements of the prudential standard for banks' exposure to crypto, which was published in December last year. Regulators have been working to regulate crypto and mitigate the risks posed by banks' exposure to crypto. The recent collapse of Silvergate Bank and Silicon Valley Bank, both of which had links to crypto, has prompted regulators to scrutinize bank involvement with crypto more closely. The Basel Committee aims to consult on the criteria for stablecoins to receive group 1b regulatory treatment, referring to 'cryptoassets with effective stabilization mechanisms.' The initial December report separated its criteria for the treatment of crypto into two groups. Group one cryptos would meet the full set of classification conditions and would be subject to capital requirements. Group two cryptocurrencies do not meet classification conditions and require newly prescribed capital treatment. The committee concluded that crypto assets using permissionless blockchains create risks that cannot be sufficiently mitigated at present, and therefore agreed to retain the existing treatment for such cryptoassets. The committee also agreed to continue monitoring the evolution of banks' crypto custody activities and consider if additional work needs to be done.