The Bank of England’s watchdog will require firms to disclose their crypto exposure
The Bank of England regulator has asked businesses to disclose any current and future exposure to crypto by next March to help it monitor stability and shape policy.
In a December 12 statement, the Prudential Regulation Authority (PRA) asked firms to share their “current and anticipated future cryptoasset exposures” and explain their use of the crypto-regulatory Basel framework.
“This will inform the work of the PRA and the Bank of England on cryptoassets, helping us to improve our prudential handling of crypto assets. [and] Analyze the relative costs and benefits of different policy options,” the PRA said.
The Basel framework outlines capital and risk management requirements for banks' exposure to crypto. It was introduced by international banking regulator Basel Committee on Banking Supervision (BCBS) in December 2022.
The Basel framework divides crypto assets into three broad categories based on their risk profiles. Source: BCBS
The PRA hopes that the collection of current and planned crypto trading activities can serve as “a basis for monitoring the financial stability implications of these assets”.
The regulator is asking firms to consider any future plans for crypto assets by September 30, 2029.
The questionnaire outlines a number of key areas the PRA wants companies to look at, including the Basel framework for holding cryptoassets and how to use permissionless blockchains.
“Despite the benefits that these new registries may bring, they also pose risks such as the lack of settlement finality, failure of settlement, and the lack of a proven relationship between the property owner and the entity. Verification method,” says one part of the questionnaire.
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The PRA has stated that “the use of permissionless blockchains cannot currently be sufficiently reduced”, although it lists this classification as remaining under review.
A growing number of companies worldwide are considering buying Bitcoin (BTC) in hopes of capturing the windfall from the cryptocurrency, which reached six-figure values earlier this month.
In the year On Nov. 29, Hong Kong-based online card and board game company Boyaa International said it had adjusted its treasury assets and converted nearly $50 million worth of Ether (ETH) to Bitcoin.
A day earlier, on November 28, Japanese investment firm Metaplanet announced plans to raise $62 million (9.5 billion Japanese yen) to buy more bitcoins for the treasury.
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