Regulators are to issue capital, liquidity and risk management rules
What the document says“The primary Federal payment stablecoin regulators shall, or in the case of a State qualified payment stablecoin issuer, the State payment stablecoin regulator shall, consistent with section 13, issue regulations implementing-- (i) capital requirements applicable to permitted payment stablecoin issuers that-- (I) are tailored to the business model and risk profile of permitted payment stablecoin issuers”
Subsection (a)(4)(A). Four subjects are named: capital requirements, the liquidity standard under paragraph (1)(A), reserve asset diversification and interest rate risk management, and operational, compliance and information technology risk management standards including Bank Secrecy Act and sanctions compliance. The capital and diversification standards are to be tailored to the business model and risk profile of issuers and are not to exceed what is sufficient to ensure their ongoing operations. A capital buffer may be included where the Federal regulators determine one is necessary for that purpose.
What the document actually says“The primary Federal payment stablecoin regulators shall, or in the case of a State qualified payment stablecoin issuer, the State payment stablecoin regulator shall, consistent with section 13, issue regulations implementing-- (i) capital requirements applicable to permitted payment stablecoin issuers that-- (I) are tailored to the business model and risk profile of permitted payment stablecoin issuers”
The watchdogs must write rules on how much cash a maker keeps. The rules must fit the size and the risk of each maker. A state watchdog writes them for a state maker.
Capital is the money a firm keeps to take a loss. The rules may not go past what keeps a maker running. Other rules cover risk and computer safety.
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