Digital Assets/Crypto
Industry News
The guidance outlines how financial institutions (FIs) can apply a risk-based approach to managing relationships with fiat-backed stablecoin issuers.
Key points from the guidance include:
➡️ Clarification of terminology and scope, focusing on fiat-backed stablecoins issued by regulated entities and fully backed by liquid reserves such as cash or government bonds;
➡️ Risk-based due diligence expectations, including understanding the issuer’s business model, client base, and financial crime risk management framework;
➡️ Tailored oversight of differing account types such as operating accounts, reserve accounts, and settlement accounts;
➡️ On-chain monitoring considerations, where FIs are encouraged to assess whether the issuer operates within its stated risk appetite; and
➡️ Ongoing monitoring and governance, including account activity reviews (AARs), compliance testing, and escalation procedures for deviations from agreed risk parameters.
✅ Financial Institutions should review the relevant frameworks and Customer Due Diligence (CDD) procedures for relationships with stablecoin issuers, ensuring that the best practices outlined in the guidance are effectively integrated into a tailored control framework.
💡 Plenitude’s Digital Assets Service delivers due diligence support to FIs on crypto issuers and Crypto Asset Service Providers (CASPs), helping them meet regulatory obligations and adopt best practices to ensure ongoing compliance.
Visit our website for more information: https://www.plenitudeconsulting.com/services/digital-assets-practice
