Federal Reserve Proposes Treating Stablecoin Circulation as Capital Cost for Supervised Issuers
(6 days ago) · 1 source · Summarized by CryptoBipto
The Federal Reserve has put forward a proposal that would require supervised stablecoin issuers to treat their tokens in circulation as a capital cost. This would mean that banks and other regulated entities issuing stablecoins would need to hold capital against their outstanding stablecoin supply, similar to how they hold capital against other liabilities.
WHY IT MATTERS
Stablecoins are cryptocurrencies designed to maintain a steady value, usually pegged to a currency like the US dollar. Think of them as digital dollars that move on blockchain networks. The Federal Reserve — the central bank of the United States — oversees banks and sets rules about how much money banks must keep on hand to stay safe. This proposal would essentially tell banks that if they issue stablecoins, they need to treat every dollar of stablecoin out in the world as something that requires them to hold extra capital, much like a loan on their books. This could make it more costly for banks to issue stablecoins, which matters because it could influence which companies end up dominating the stablecoin market and how stablecoins are regulated going forward.
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- cryptoslate.com
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