Commerzbank – the fourth-largest bank in Germany – announced it received a crypto custody license, earlier today. Notably, it is the first full-service bank to gain such a license in a European country. Additionally, the bank seeks to provide crypto custody support to its institutional clients now that it has secured a license.
The announcement read,
“Commerzbank is the first German full-service bank to be granted the Crypto Custody Licence pursuant to Article 1 Section 1a Sentence 1 No 6 German Banking Act (KWG). The licence will enable the Bank to build up a broad range of digital asset services, with particular emphasis on crypto assets.”
European Union mulls over stablecoin liquidity
Notably, Germany’s leading bank received a green light when the European Union is set to implement one of the most comprehensive crypto rules. The Markets in Crypto Assets regulation (MiCA), which will go into effect this coming year, has gained praise from several leaders including France’s Finance Minster Bruno Le Maire. The minister claimed that the new regulation would “put an end to the crypto wild west”.
The new rules, adopted by 27 countries, will mandate crypto companies to have secured authorization in at least one of the 27 countries to provide services. Additionally, companies will have to start publishing a clear white paper on the offered crypto assets.
Furthermore, MiCA also has dedicated rules for stablecoins, which will be dubbed e-money tokens (EMTs), if it is pegged to fiat currency. Additionally, the rules will also ban EMTs, which are not pegged to EU currency, from having over 1 million transactions per day. This rule also extends to algo-stablecoins.
With this in place, the EU is currently mulling over the liquidity requirement for stablecoins. A draft published by the European Banking Authority (EBA) seeks periodic liquidity stress requirements for large stablecoins, along with liquidity requirements for reserve assets. The press release said,
“In the RTS on liquidity requirements of the reserve of assets the EBA proposes minimum percentage rates of the reserve of assets with a maturity of no longer than between 1 and 5 working days. Furthermore, the EBA proposes overall techniques for liquidity management of the reserve of assets. This includes minimum creditworthiness and liquidity soundness of credit institutions”
Source : AMBCrypto by Priya NV / November 16, 2023