US banking regulators have clarified that tokenised securities will be treated at par with the traditional securities under existing norms relating to capital requirements. The aim is to keep the financial rules “technology neutral”.
The guidance was issued jointly by the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency. According to the regulators, the technology used to issue or trade a security will not change how it will be treated under banking regulations.
In simple terms, a tokenised security, such as a stock or bond issued on a blockchain, will receive the same capital treatment as its conventional counterpart. This means banks will not need to hold extra capital simply because the asset is tokenised.
The regulators explained that if a tokenised security meets the same legal and financial criteria as the traditional version of that asset, it can be treated identically under capital rules.
The agencies also clarified that derivatives linked to tokenised securities will be treated the same as derivatives referencing the non-tokenised versions.
Another important point in the guidance is that tokenised securities can still qualify as financial collateral. If the assets are liquid and legally controlled by the lending institution, they can be used to reduce credit risk in lending agreements.
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