Israel's central bank seeks to establish stablecoin rules after terraUSD collapse

The Bank of Israel laid out a number of proposed rules for stablecoin activity in the country, in a move motivated by May's demise of algorithmic stablecoin terraUSD ( UST-USD ), according to a document published Wednesday. "The goal of the regulation is to allow activity in stablecoins while managing the risk inherent in using them, and adjusting the consumer protections and prudential requirements to this unique activity," the central bank said. As such, the BoI recommended requiring stablecoin issuers to keep reserves fully in-line with the amount of tokens outstanding. It also proposed that stablecoin issuers should be required to get licenses for operations. For coins that don't have "systemic importance," issuers should be licensed by the Capital Market Authority, while those that do have systemic importance should be licensed by the Banking Supervision Department. In addition, "a stablecoin that is declared to be a controlled payment system shall be overseen by the payment systems oversight function at the" BoI, the document said. The proposed rules mapped out by the BoI are open to the public for comments and feedback until March 15. The news comes as regulators across the globe seek to gain control of the wider stablecoin space. In the U.S., the Securities and Exchange Commission was said to be investigating whether such tokens are issued in violation of investor protection laws.