Basel Committee Proposes Maturity Limits for Stablecoin Reserve Assets

By: Eva Baxter

The Basel Committee on Banking Supervision, an international banking regulatory body, has suggested introducing new measures to limit the maturity of reserve assets backing stablecoins.

The regulatory body, in its reevaluation of prudential standards for banks' exposure to stablecoins, put forward amendments mostly concerning the composition of stablecoin reserve assets particularly for cryptoassets classified under Group 1b. According to the committee, if longer-term assets are allowed to be maintained as reserve assets, these should be overcollateralized to ensure the claims of stablecoin holders.

The committee's proposal was based on its review work conducted over the course of 2023, the results of which were subsequently published on the committee's website on December 14. These efforts are geared towards tightening requirements to allow stablecoins to qualify as less risky than unbacked cryptocurrencies like Bitcoin and thus reduce risk to the international banking system.