USDT and USDC at Risk as BIS Endorses Only Permissioned Stablecoins
Highlights
- The BIS has issued new guidance, restricting the use of stablecoins like USDT issued on permissionless blockchains;
- Crypto industry veterans like Caitlin Long have criticized the BIS decision which favour stablecoins like JPMCoin.
- BlackRock’s Head of Digital Assets recently endorsed public blockchains over private ones.
Stablecoins issued on permissionless blockchains, such as Tether’s USDT and Circle’s USDC, face significant regulatory challenges as the Bank for International Settlements (BIS) has issued new guidance tightening criteria for these stablecoins.
BIS Targets Stablecoins like USDT and others
On Wednesday, July 17, the Basel Committee on Banking Supervision published its final disclosure report for the banks’ crypto-asset exposure. As a result, banks will need to disclose qualitative and quantitative reports on their crypto-related activities and the liquidity requirements to maintain stability.
It has also tightened up the criteria for certain stablecoins that will receive a preferential “Group 1b” regulatory treatment.
The #BaselCommittee has published targeted amendments to its cryptoasset standard to tighten the criteria for certain stablecoins to receive a preferential regulatory treatment. The standard is to be implemented by 1 Jan 2026. More here: https://t.co/EL2aad1YgP pic.twitter.com/0NQkmck8Fw
— Bank for International Settlements (@BIS_org) July 17, 2024
This means that there could be severe restrictions on the functioning of permissionless stablecoins such as Tether’s USDT, Cricle’s USDC, and others. Interestingly, this development comes on the same day when the Hong Kong Monetary Authority released consultation papers on a licensing regime for stablecoin issuers.
Also Read: Altcoins to Sell Hot on the heels of Dwindling Stablecoins Volume
Crypto Industry Veterans Lash Out At BIS
Caitlin Long, CEO of Custodian Bank, expressed her dismay over the recent decision by BIS stating that they have now excluded stablecoins issued on permissionless blockchains from use by banks while favoring permissioned stablecoins instead.
She further commented that the United States is likely to disregard this development, stating, “The US will almost certainly just ignore this. It’s a shame tho–BIS was leading the US on crypto but just went backward.”
At Coinbase’s State of Crypto event last month, BlackRock’s Head of Digital Assets stated that the asset manager now believes public blockchains are superior to private ones.
However, the new guidance from the Bank for International Settlements (BIS) encourages banks to use only permissionless stablecoins, such as JPMorgan’s JPMCoin. Interestingly, banking firm State Street is reportedly planning for a stablecoin launch. This could be another major blow to permissionless stablecoins like USDT.
In a tweet on X, Fox Business reported Eleanor Terret wrote: “I’m told the initial proposal would have included USDC and others in that group but the final guidance changed to exclude all stablecoins issued on permissionless blockchains”.
Also Read: Circle Bags MiCA’s E-Money License For USDC and EURC
- John Bollinger Sees ‘W’ Bottom Forming in Ethereum and Solana, Not Bitcoin
- Robert Kiyosaki Calls Bitcoin and Ethereum ‘Real Money,’ Urges Investors to Ditch ‘Fake’ Fiat
- ‘Sell Gold, Buy Bitcoin’: Expert Flags Major Market Bottom Signal
- Ripple Makes ‘Unusual’ $500M Transfer Amid $1 Billion XRP Treasury Plans
- ‘I’m Going Bonkers’: Dave Portnoy Says He’ll Buy XRP Again If It Dips Below This Level
- Solana Price Prediction: Analyst Notes Bearish Breakdown Amid Derivatives Slowdown
- Shiba Inu Price Eyes Recovery as Burn Rate Jumps 10,785% – Can SHIB Hit $0.000016?
- Ethereum (ETH) Price Prediction: Analyst Eyes $7,000 by Q4 as Bitmine Accumulates $281M ETH — Will History Repeat Itself?
- HYPE Price Teeters Amid Weak Technicals and Soaring Liquidations
- XRP Price Prediction As Ripple Announces $1B Treasury Plans – Is a Rebound Imminent?
- Bitcoin Price Prediction Amid Gold’s Parabolic Rally to Second-Largest Reserve Asset
Why Trust CoinGape
CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
