UK Central Bank, BIS Launch Stablecoin Monitoring Project
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The UK Central Bank and the Bank for International Settlements (BIS) have announced a new project focused on tracking stablecoins. This initiative aims to improve oversight and ensure stability in the growing world of digital currencies. UK Central Bank, BIS Start Stablecoin Monitoring Project The Bank for International Settlements and the Bank of England have collaborated to create a system that offers near real-time insights into stablecoin liabilities and their underlying assets. The project, known as Pyxtrial, might also be used to track other tokenized assets supported by real-world holdings. This effort aims to tackle key issues faced by financial regulators, as noted in a report released on Wednesday. Pyxtrial includes tools that allow authorities to access data directly from issuers’ systems for accurate verification of on-chain liabilities. This initiative comes in response to past concerns about the legitimacy of the reserves claimed by stablecoin issuers. In response to the collapse of the FTX exchange in 2022, various exchanges and issuers have chosen to implement self-regulation. They have been addressing concerns by publishing their “proof of reserves.” What is Proof of Reserves? Proof of reserves is a process that verifies whether a trading platform or cryptocurrency firm has sufficient backing for the digital assets it manages on behalf of its users, ensuring a one-to-one match between assets held and customer deposits. Proof of Reserves (PoR) is a clear and objective auditing practice for cryptocurrency firms, offering a detailed report on their reserve assets. Independent auditors utilize cryptographic proofs to confirm the total value of customer assets and verify that the company holds sufficient reserves to cover all potential withdrawals. This approach helps avert liquidity problems during large-scale withdrawals and provides clarity to users about the security of their funds. By employing blockchain technology, Proof of Reserves ensures a secure auditing…
Filed under: News - @ August 1, 2024 12:12 pm