EBA proposes new liquidity guidelines for stablecoin issuers

The European Banking Authority (EBA) published three consultation papers Wednesday on the proposed liquidity requirements of the reserve assets held by stablecoin issuers.

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Fast Facts

• The proposed guidelines aim to ensure that the amount of reserve assets held by an issuer can meet the market value of the stablecoin and allow any redemption requests at all times.

• The financial watchdog said that the guidelines will act as a liquidity stress test for stablecoin issuers, which will highlight instances of insufficient liquidity.

• Based on the results of the liquidity stress testing, the EBA may decide to increase the liquidity requirements of a particular stablecoin issuer, the regulatory agency said in a press release. 

• The EBA is seeking feedback on its consultation papers until Feb. 8, 2024. It will also conduct a virtual public hearing on Jan. 17, 2024.

• The consultation papers are part of the third batch of the Markets in Crypto-Assets (MiCA) policy products. MiCA is the bloc’s regulatory framework for the crypto market. 

• The European Securities and Markets Authority (ESMA) published the second consultation paper on the MiCA bill on Oct. 5, with the feedback period ending on Dec. 14.

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