Circle proposes new capital risk framework for stablecoins
According to the news from Mars Finance, on August 16th, Circle recently released a white paper titled "Risk Capital for Stablecoins", proposing a new risk-based capital management model for stablecoins and other digital cash tokens. According to the white paper, stablecoins require sufficient capital reserve requirements, which exceed the current capital standards established under the Basel banking regulatory framework, in order to mitigate the unique risks of stablecoins, other fiat-equivalent tokens, and their issuers.
The white paper explains that these unique risks include, but are not limited to, the decline in token prices due to the prevalence of market trading and the secondary market, followed by a "bank run" on digital tokens due to excessive sell-offs, as well as operational and technological risks.
