The American Bankers Association today said that while the Basel Committee on Banking Supervision is moving in the right direction in seeking to clarify its standard on banks’ exposures to cryptoassets, improvements could be made in the committee’s proposal, some parts of which are likely to prove impractical to implement. BCBS in December announced proposed amendments to the standard to flesh out the criteria on the composition of the reserve assets that back stablecoins, and to put in place a due diligence requirement to ensure that banks have an adequate understanding of their stabilization mechanisms.
In a letter, ABA said the committee was taking “a useful step” to bring some clarity to the criteria, but the proposed approach “deserves significant further development.” Overall, BCBS should balance the promotion of stablecoin markets and the development of a safe and sound regulatory and supervisory framework, the association said. Also, implementation of a stablecoin reserve regime must include the bank custodian’s ability to hold cash deposits in connection with stablecoin operations, and audits of stabilization mechanisms should occur at least quarterly.
“ABA urges BCBS and its national counterpart regulators to preserve the opportunity for regulated banks to play appropriate roles in stablecoin markets, because doing so will both promote market development (as potential stablecoin transactors and holders have market access through intermediaries that are known, supervised, trusted, and well-capitalized) and enhance safety and soundness,” ABA said.
