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Stablecoin reserve rules require issuers to hold backing assets

Regulators set reserve requirements to ensure stablecoins are backed by assets that support the peg as tokens move into circulation.

Reported · Written up by our desk · Regulation

Stablecoins are digital tokens designed to hold a steady value by pegging their price to an underlying asset, most often the U.S. dollar, according to The Block.

To support that peg, stablecoin reserve requirements spell out what assets issuers must hold to back the stablecoins they issue.

These rules are jurisdiction specific, and different regulatory frameworks can set different standards for what counts as reserve assets and how much backing is required as stablecoin supply expands.

The Block explains that reserve requirements are intended to strengthen confidence that stablecoins remain properly collateralized across their lifecycle.

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