US Federal Reserve, US FDIC, and US OCC clarify capital rules for tokenized securities
Change
US Federal Reserve, US FDIC, and US OCC defined an "eligible tokenized security" and required banks to apply the same capital risk weights and capital rules to those tokens as to their legally identical non‑tokenized securities.
Why it matters
Banks must evaluate the legal form of an instrument rather than the ledger technology to determine capital treatment, removing a route to lower capital requirements based solely on tokenization. Regulators also demand proof of legal enforceability for tokenized collateral and expect banks to bolster controls for cyber risk, smart‑contract vulnerabilities, and settlement exposures.
Implications
- • Bank capital planning and risk teams must include eligible tokenized instruments in existing risk‑weight calculations instead of creating separate capital categories for tokens.
- • Banks' legal and securitization teams must obtain and document legal opinions showing tokenized assets carry identical ownership and cash‑flow rights before applying traditional capital treatment.
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Source
Topics
Compliance Blockchain & Web3 Banking Regulation Financial Services Cryptocurrency