Circle proposes a new capital risk framework for stablecoins

Golden Finance reported that Circle recently released a White Paper titled ‘Venture Capital for Stable Value Tokens’, proposing a new risk-based capital management model for stablecoins and other Digital Cash Tokens. The authors of the White Paper believe that stablecoins require sufficient capital reserve requirements, which go beyond the current capital standards established under the Basel banking regulatory framework to mitigate the unique risks associated with stablecoins, other fiat-equivalent tokens, and their issuers. According to the authors, these unique risks include, but are not limited to, token price decline due to market trading and the prevalence of the Secondary Market, subsequent digital token ‘bank run’ caused by excessive dumping, operational risks, and technical risks.