Bank of England’s PRA Mandates Firms to Disclose Crypto Asset Exposure by 2025

Jimmy Aki
Last Updated:

Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.

The regulatory arm of the Bank of England (BoE), the Prudential Regulation Authority (PRA), has issued a directive requiring firms to disclose their current and future exposure to crypto assets by March 2025.

The measure aims to establish a better monitoring base to assess financial stability risks in the evolving crypto market.

Key Details of Bank of England PRA Directive

The PRA’s statement, dated December 12, requires firms to report their crypto asset exposures and demonstrate their adherence to the Basel framework – a global regulatory standard introduced by the Basel Committee on Banking Supervision in December 2022.

This framework outlines capital and risk management requirements specific to crypto asset holdings.

Furthermore, firms must reveal any planned crypto-related activities up to September 30, 2029, outlining potential risks and their approach to permissionless blockchains.

The regulator underscored significant risks associated with permissionless blockchains, such as settlement failures, lack of finality in transactions, and the absence of a clear link between asset ownership and control mechanisms.

While the PRA recognizes the potential benefits of these blockchain technologies, it maintains that these risks cannot yet be sufficiently mitigated.

However, the classification of permissionless blockchains as a high-risk technology remains under review, signaling that regulators are open to evolving their stance as the technology matures.

Broader UK Crypto Regulation Landscape Amid Growing Interest in Crypto Assets

The PRA’s move aligns with the broader efforts in the UK to strengthen its regulatory framework for digital assets.

In November 2023, the Bank of England and the Financial Conduct Authority (FCA) introduced a roadmap to regulate stablecoins.

The UK Treasury is reportedly considering legislative changes to enable fiat-backed stablecoins for retail payments, with new regulations expected within months.

Economic Secretary to the Treasury Tulip Siddiq recently announced plans to unveil a comprehensive regulatory framework early next year, consolidating rules for stablecoins and staking services under one regime.

Meanwhile, the Bank of England continues to explore a central bank digital currency (CBDC), dubbed “Britcoin,”

In preparation for its rollout, the Bank of England assembled a team of 30 experts in April 2023 to design the currency, which will be backed by the UK government.

Globally, institutional interest in cryptocurrencies continues to grow.

In November 2023, Hong Kong-based Boyaa Interactive restructured its treasury assets by converting $50 million worth of Ether, reflecting confidence in the long-term value of digital currencies.

Similarly, Japanese investment firm Metaplanet announced plans to raise over $62 million to increase its Bitcoin holdings, adding to an existing treasury valued at over $114 million.

Other countries, such as Singapore and the United Arab Emirates (UAE), have taken proactive steps to regulate stablecoins, with the UAE recently approving a new stablecoin pegged to the dirham.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.