A full reserve mandate requires an entity issuing digital assets, particularly stablecoins, to hold an equivalent amount of liquid, high-quality reserves for every unit issued. This policy ensures that each digital asset can be redeemed one-for-one with its underlying reserve asset at any time. It aims to eliminate fractional reserve risks and maintain peg stability.
Context
The concept of a full reserve mandate is a central point of discussion in the regulation of stablecoins, with significant implications for their perceived safety and stability. News often reports on legislative proposals and regulatory guidance advocating for stricter reserve requirements. The debate centers on the types of assets that qualify as suitable reserves and the frequency of attestation requirements.
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