Bank Of England’s Regulator Asks Businesses To Declare Exposure To Crypto By March 2025

The regulatory division of the Bank of England has called on firms to disclose their current and anticipated crypto asset exposures by March 2025.

The move, which was announced on 12 December 2024, by the Prudential Regulation Authority (PRA), will gather critical data to shape crypto regulatory policies and monitor the integration of digital assets within the financial ecosystem.

【Bank of England watchdog asks firms to disclose crypto exposure】

The Bank of England’s regulatory arm has requested that businesses disclose any current or future exposure to crypto by next March so it can monitor stability and help shape policy.

In a Dec. 12 statement, the… pic.twitter.com/L5ET9SyXEu

— MetaEra (@MetaEraHK) December 13, 2024

According to PRA’s statement, detailed disclosures by businesses will be required for the sake of prudential treatment for crypto assets and to understand the financial stability implications associated with crypto-related activities.

Shaping Policy Through Data Collection

The PRA outlined its intentions to use the collected data as a foundation for developing targeted regulatory frameworks.

Firms will now be required to disclose information at the highest level of UK consolidation, involving tokenized assets, stablecoins, and unbacked crypto assets.

“This will inform work across the Bank of England on crypto-assets by helping us calibrate our prudential treatment of crypt oasset exposures and analyse the relative costs and benefits of different policy options,” the PRA said.

Moreover, it will also provide an updated view of the firms’ current and intended crypto-asset related business activities as a base from which to monitor the financial stability implications of these assets, the report highlighted.

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Upcoming Phases In UK Crypto Regulation

As the UK advances its approach to crypto regulation, the Financial Conduct Authority (FCA) has introduced a discussion paper, DP23/4, outlining a proposed framework for regulating fiat-backed stablecoins. 

The FCA’s proposals align with the principle of “same risk, same regulatory outcome,” 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 specialized market abuse regime for crypto assets and introduced updated guidelines for financial promotions, including stricter measures to regulate social media campaigns and influencer endorsements.

In comparison to the EU’s Markets in Crypto Assets Regulation (MiCAR), the UK’s approach appears to be more gradual, initially focusing on stablecoins.

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Scope Of BoE Regulator’s Efforts

The PRA’s current effort will reportedly assess how firms are applying 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 permission. While these may offer benefits, they also carry a certain level of risk.

These risks include some losses in settlement and problems in confirming the ownership of the asset.

The regulator in the country’s monetary policy stated that while there are definite risks pertaining to blockchains, they are still under examination and cannot be eliminated.

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Global Push For Regulatory Clarity

Meanwhile, the PRA’s initiative reportedly comes at a time of heightened global interest in cryptocurrencies. Events such as the rise of Bitcoin past $100,000 have forced governments and businesses to revise their earlier stand on digital currencies.

In November 2024, Hong Kong-based Boyaa Interactive International swapped $50 million worth of Ether for Bitcoin. Likewise, Metaplanet in Japan is aiming to increase its holdings of Bitcoin assets by 62 million dollars.

By requiring firms to disclose their application of the Basel framework and their use of permissionless blockchains, the PRA seeks to identify gaps in existing regulations and explore the trade-offs between adopting new technologies and ensuring financial stability. 

Disclaimer

Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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