Central Bank of Israel Regulation Rules for Stable Currency
It is reported that the Central Bank of Israel issued the regulation rules of stable currency, which follows the digital asset regulation guidelines issued by …
It is reported that the Central Bank of Israel issued the regulation rules of stable currency, which follows the digital asset regulation guidelines issued by the Ministry of Finance of the country in November. The Central Bank requires the issuer of stable currency to maintain reserves matching the amount of cryptocurrency in circulation. The document also suggests that the regulatory role should be split among multiple regulatory agencies to improve efficiency, and the issuer of stable currency should obtain a business license. The issuer of a larger stable currency that may have a systemically important position should obtain the permission of the banking regulatory authority, while other issuers should be supervised by the Capital Market Authority.
The Bank of Israel issued the stable currency specification, requiring the reserve ratio to be higher than 100%
Interpretation of the news:
The Central Bank of Israel recently released new regulation rules for stable currencies, following the digital asset regulation guidelines from the Ministry of Finance issued in November. As per the new rules, the issuer of stable currency needs to maintain reserves that match the amount of cryptocurrency in circulation.
This move from the Central Bank of Israel is a clear indication that they aim to protect investors and their assets from instability, market risks, and fraud. Stable currencies are designed to minimize volatility by being pegged to a fiat currency such as the US dollar, making it a more secure option for investors. However, at times, these stable currencies may face the risk of not being backed by an equivalent reserve, which could lead to a high level of risk.
The regulation document also recommends dividing the regulatory role among different regulatory agencies to ensure more effective regulation. It suggests that the issuer of a significant stable currency that could create a systemically important position should seek the permit from the banking regulatory authority, while smaller issuers should be supervised by the Capital Market Authority. This approach is especially significant for the stable currency market, where measures must be taken to ensure stable prices and to prevent significant fluctuations in prices that could harm the market.
The regulations highlight that issuers of stable currencies should obtain a business license, which will help ensure that stable currency providers have a robust financial infrastructure, the necessary expertise, and the capital required to provide quality services to their customers. The license will also help establish trust in the market, making it more attractive to investors and enabling regulators to take swift action when necessary.
In conclusion, the Central Bank of Israel’s decision to issue new regulation rules for stable currencies is a significant step towards creating a legal and secure environment for investors. The measure will significantly reduce the risks faced by issuers of stable currencies, making the market more transparent and trustworthy. Being backed by regulation and clear rules, we may see more stable currencies in the future, attracting more investors who seek stability in their investment portfolios.
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