Bank of England calls on firms to disclose crypto assets
Date: 2024-12-13 Author: Henry Casey Categories: CRYPTO PAYMENTS
The Bank of England, through its Prudential Regulation Authority (PRA), has required firms to disclose information about their “current and expected future” crypto assets by March next year. This data will be used to assess the stability of the financial system and choose the best regulatory approaches.
The PRA statement on December 12 emphasized that firms must also explain how they apply the Basel Framework for Crypto Assets. This framework, developed by the Basel Committee on Banking Supervision (BCBS) in December 2022, sets out capital and risk management requirements for banks dealing with crypto assets.
The Basel framework divides crypto assets into three risk categories, allowing them to effectively manage their impact on financial stability. The PRA intends to use the information received as a basis for long-term monitoring of the impact of cryptocurrencies on the economy, including the plans of companies until September 30, 2029.
The questionnaire proposed by the regulator covers key aspects, such as the use of the Basel framework for the governance of crypto assets and the use of permissionless blockchains. The PRA notes that while permissionless blockchains have advantages, they also come with risks, such as the lack of guarantees of settlement finality, possible settlement failures and uncertainty of asset ownership.
At the same time, the PRA emphasizes that the risks associated with permissionless blockchains are not yet well understood and require further analysis.
Interest in cryptocurrencies continues to grow. Many companies around the world are starting to actively invest in crypto assets. For example, Japanese investment firm Metaplanet announced on November 28 that it intends to raise more than $62 million to increase its Bitcoin reserve, which already contains 1,142 coins worth over $114 million. A day earlier, Hong Kong-based Boyaa Interactive International reported the transfer of crypto assets worth almost $50 million from Ethereum to Bitcoin.
The PRA hopes that the data will help improve approaches to regulating crypto assets, minimize risks, and determine further steps to integrate digital assets into the financial system.
