Drawing the line on oversight and monitoring –

Banks continue to be pulled in every direction on how to manage the financial crime risks associated with digital assets. When it comes to stablecoins, the advent of regulation in critical jurisdictions across the world to normalise their use has created the expectation that the path will improve for stablecoin issuers as they seek access to traditional banking.

Today the Wolfsberg Group addresses that tension directly with our Guidance on the Provision of Banking Services to Fiat-backed Stablecoin Issuers. Wolfsberg operates on a consensus basis – the guidance published today represents the collective view of the twelve member banks on the appropriate financial crime risk framework for providing operating accounts, reserve management, and client settlement to a fiat-backed stablecoin issuer.

Where to draw the line with respect to oversight and monitoring? The Wolfsberg Group believes that most of the same financial crime risk management principles apply in developing and monitoring a relationship with any type of bank or non-bank financial institution, which is reinforced in this document. However, this guidance also explores the unique financial crime risks associated with the provision of banking services to a fiat-backed stablecoin issuer operating in a regulated jurisdiction, and establishes a framework for financial institutions to manage these relationships appropriately.

You can access the full guidance here.