US Regulators Relax Capital Requirements for Tokenized Securities
US Banking Regulators Clarify Blockchain-Based Securities Rules
On March 5, the Federal Reserve, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency issued new guidance clarifying that banks will not be required to hold additional capital against losses when dealing with blockchain-based securities. This move is in line with the regulators' stance that their rules are technology neutral.
The guidance, issued due to increasing interest from banks in representing ownership rights in tokenized securities, confirms that the technologies used to issue and transact in a security do not generally impact its capital treatment. This decision is expected to benefit the crypto industry, which has seen a surge in enthusiasm for the sector in recent years.
Blockchain-based instruments, known as tokenized shares, track traditional equities and could revolutionize stock markets by allowing shares to be traded 24/7 and settled instantly, boosting liquidity and reducing transaction costs. Several companies, including Robinhood, Kraken, and Gemini, have launched tokenized stocks in Europe, while others, such as BlackRock and Franklin Templeton, offer tokenized treasury products.
Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data
Investor Takeaway
US banking regulators have relaxed capital requirements for tokenized securities, which may boost the crypto industry.
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