Coinbase and Circle are challenging certain aspects of the Basel Committee on Banking Supervision's proposed stricter criteria for preferential regulatory treatment of banks' exposure to stablecoins.
The committee issued a consultation in December suggesting banks should conduct thorough due diligence to ensure that they have a good understanding of the stabilizing mechanisms of the stablecoins to which they are exposed.
The proposed requirements are intended to determine the eligibility of stablecoins for a "Group 1b category," which offers preferential regulatory treatment.
According to the consultation paper, specific standards, such as low volatility and adequate liquidity, must be met. The deadline for submitting comments on the document was March 28.
In a letter sent on that date, Coinbase expressed its disappointment with the committee's approach. According to the platform, many of the requirements are not based on asset risk for a bank, but reflect other policy objectives that are not typically included in capital requirements.
Stablecoin issuer Circle expressed disapproval toward the committee's stance on permissionless blockchains. According to Circle's March 27 comment letter, banks should be encouraged to use technologies such as blockchain, cryptography and mobile wallets, which are open source, to enhance their digital transformation and bolster their cybersecurity efforts.