Bank of England watchdog asks firms to disclose crypto exposure
2024-12-13
Category: None

The Bank of England’s regulatory arm has requested that businesses disclose any current or future exposure to crypto by March next year so it can monitor stability and help shape policy. 
In a Dec. 12 statement, the Prudential Regulation Authority (PRA) asked firms to share their “current and expected future crypto asset exposures” and how they’re using the crypto-regulating Basel framework.
“This will inform work across the PRA and the Bank of England on cryptoassets by helping us calibrate our prudential treatment of cryptoasset exposures, [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 in December 2022 by the international banking regulator, the Basel Committee on Banking Supervision (BCBS).
The PRA hopes that gathering current and intended crypto business activities can be used as a “base from which to monitor the financial stability implications of these assets.”
The regulator is asking for firms to take into account any future plans of crypto assets up to Sept. 30, 2029. 
The questionnaire details several key areas the PRA wants firms to address, including how they are using the Basel framework for exposure, holding crypto assets and any usage of permissionless blockchains.
“While there are benefits that these new types of ledgers can bring, they also pose risks such as lack of settlement finality, settlement failure, and no guaranteed link between the intended owner of the asset and the entity that may have control of the authentication, validation mechanism” part of the questionnaire reads.
The PRA notes that the “use permissionless blockchains cannot be sufficiently mitigated at present,” although it has listed this classification as remaining under review. 
A growing number of firms around the world are considering or taking the plunge to buy Bitcoin (BTC), hoping to catch a windfall from the cryptocurrency which hit a milestone six figures early this month.
On Nov. 29, the Hong Kong online card and board game company Boyaa Interactive International said it had adjusted its treasury assets and swapped its nearly $50 million worth of Ether (ETH) into Bitcoin.
A day earlier, on Nov. 28, Japanese investment firm Metaplanet announced it planned to raise over $62 million (9.5 billion Japanese yen) to purchase more Bitcoin for its treasury, which currently holds 1,142 Bitcoin worth over $114 million.