The Bank of England’s regulatory division has called on firms to disclose their current and planned exposures to crypto assets by March 2025.
This decision, announced on December 12, 2024 by the Prudential Regulatory Authority (PRA), will collect critical data to shape cryptocurrency regulatory policies and monitor the integration of digital assets within the financial ecosystem.
【Bank of England watchdog asks companies to disclose crypto exposure】
The Bank of England regulator has asked companies to disclose any current or future crypto exposure by next March so it can monitor stability and help shape policy.
In a press release dated December 12, the… pic.twitter.com/L5ET9SyXEu
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According to the PRA statement, Detailed information from firms will be required for the prudential treatment of crypto assets and to understand the financial stability implications associated with crypto-related activities.
Shaping policy through data collection
The PRA has outlined its intention to use the data collected as a basis for developing targeted regulatory frameworks.
Companies will now be required to disclose information to the highest level of consolidation in the UK, relating to tokenized assets, stablecoins and unsecured crypto assets.
“This will inform the Bank of England’s work on cryptoassets by helping us to calibrate our prudential treatment of exposures to cryptoassets and analyze the relative costs and benefits of different policy options,” the PRA said.
Furthermore, it will also provide an up-to-date view of companies’ current and planned business activities related to crypto assets, as a basis from which to monitor the financial stability implications of these assets, the report highlights.
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Upcoming phases in UK crypto regulation
As the UK moves forward with its approach to crypto regulation, the Financial Conduct Authority (FCA) has presented a discussion paper: DP23/4describing a proposed framework for regulating stablecoins backed by fiat currencies.
The FCA’s proposals align with the “same risk, same regulatory outcome” principle, seeking to apply consistent oversight while tailoring rules to address the specific risks of crypto assets.
In its 2024/25 Business Plan, the FCA announced a specialist market abuse regime for crypto assets and introduced updated guidelines for financial promotions, including stricter measures to regulate social media campaigns and influencer support.
Compared to the European Markets in Crypto Assets Regulation (MiCAR), the UK’s approach appears to be more progressive, initially focusing on stablecoins.
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Scope of efforts of the BoE regulator
The PRA’s current efforts would assess how companies apply these standards, particularly in areas such as tokenized assets and stablecoins.
The scope of the PRA questionnaire also includes other blockchains that do not require authorization. While these measures may offer benefits, they also carry a certain level of risk.
These risks include certain losses during settlement and problems confirming ownership of the asset.
The country’s monetary policy regulator said that while blockchains pose definite risks, they are still under study and cannot be eliminated.
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Global pressure for greater regulatory clarity
At the same time, the PRA’s initiative would come at a time when global interest in cryptocurrencies has increased. Events such as Bitcoin’s rise above $100,000 have forced governments and businesses to rethink their previous stance on digital currencies.
In November 2024Hong Kong-based Boyaa Interactive International exchanged $50 million worth of Ether for Bitcoin. Likewise, Metaplanet in Japan aims to increase its Bitcoin asset holdings by $62 million.
By requiring companies to disclose their application of the Basel Framework and their unauthorized use of blockchains, the PRA seeks to identify gaps in existing regulations and explore the trade-offs between adopting new technologies and ensuring financial stability.
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