REGULATORY · COMPETITIVE · USA
US regulators set tokenized capital treatment
Change
The Federal Reserve, FDIC, and OCC issued joint guidance that eligible tokenized securities receive the same bank capital treatment as their non-tokenized equivalents under technology-neutral capital rules.
Why it matters
Capital requirements do not change based on how a security is issued or transferred, including via blockchain. An “eligible tokenized security” is defined as a tokenized asset with the same legal rights as the non-tokenized version, including the same claim on cash flows or ownership. For eligible instruments, banks apply the same risk weights and capital rules used for the traditional form. Tokenized bonds or stocks that meet the definition of financial collateral can be recognized as collateral under existing rules using the same haircuts and conditions. Risk management expectations include controls for cyber-risk, smart-contract bugs, settlement risk, and compliance with other laws beyond capital rules.
Implications
- • Capital calculations for eligible tokenized securities use the same risk weights and capital rules as the non-tokenized form.
- • Tokenized securities that qualify as financial collateral are recognized under existing collateral rules with the same haircuts and conditions.
- • Tokenization does not change whether an instrument is treated as a security for capital-rule purposes.
- • Risk management controls are required for cyber-risk, smart-contract bugs, settlement risk, and broader legal compliance.
Who is affected
- • Bank capital and treasury functions
- • Bank risk management and model governance teams
- • Bank compliance and legal teams
- • Banks using tokenized securities as collateral
Source
Topics
Law & Public Safety Compliance Finance & Banking Banking Regulation Cryptocurrency