Coinbase Criticises Basel Committee’s Stablecoin Requirements

The Basel Committee on Banking Supervision’s requirements reveal an intent to significantly restrict banks’ holding and use of stablecoins. This is stated in comments from Coinbase on the organisation’s consultative document.

“Many proposals are not based on the risks of stablecoins to the bank, but rather reflect other policy objectives that the Committee does not typically include in capital requirements,” the letter states.

The consultative document aims to determine the compliance of stablecoins with the criteria of “category group 1b”, which offers a preferential regulatory regime.

To qualify for this category, certain standards must be met, including low volatility and sufficient liquidity.

The Committee suggested that banks conduct a comprehensive review to ensure they “have an adequate understanding of the mechanisms for stabilising the exchange rate of stablecoins”.

The requirements were also criticised by Circle. The issuer of USDC noted that the Committee’s assessment of public blockchains requires further development. Analysts from the supervisory organisation mentioned inherent “unique risks” that prevent assets issued on them from being classified as Group 1.

“There are strong arguments that banks should be encouraged to use blockchains, cryptography, mobile-supported wallets, and other open-source technologies to advance their digital transformation and cybersecurity efforts,” the commentary states.

Circle highlighted the firm’s successful experience and partnership with leading institutions.

“There is a model of cooperation and opportunities that banks can leverage, and the Committee should encourage them,” the company suggested.

Previously, the Crypto Council for Innovation, Paradigm, the US Chamber of Commerce, and others supported Coinbase in its demand for the SEC to develop rules for the digital asset industry.

In January, Circle’s founder and CEO Jeremy Allaire assessed the chances of implementing global stablecoin regulation in 2024 as high.