Bank of England Demands Firms to Disclose Crypto Asset Exposure by March 2025
In the latest development, the Bank of England’s regulatory arm, the Prudential Regulation Authority (PRA), has release The directive requires companies to disclose their current and expected exposure to crypto assets by March 2025. The development comes as the UK assesses the impact of virtual digital assets on its economy and financial system.
The PRA said in a statement on December 12 that the move was aimed at improving financial stability and developing the central bank’s approach to regulating fast-growing industries.
Current and future cryptocurrency risks
Notably, the regulator has asked firms to report on their “current and expected future crypto-asset risks” and outline their application of the Basel Framework, which was launched by the Basel Committee on Banking Supervision (BCBS) in December 2022 A regulatory standard that sets capital and risk management requirements for cryptocurrency exposures.
The statement emphasized: “This will inform the work of the PRA and the Bank of England on cryptoassets, helping us to adjust our prudential treatment of cryptoasset risks (and) analyze the relative costs and benefits of different policy options.”
Notably, the directive goes beyond the current scope, requiring companies to consider any future plans to participate in cryptoassets by September 30, 2029. The PRA’s questionnaire focused on several key areas, such as how companies implement the Basel framework and their use of crypto-assets. Permissionless blockchain.
Concerns about permissionless blockchain
Regulators have expressed specific concerns about permissionless blockchains, citing risks such as settlement failures, lack of settlement finality, and lack of guaranteed links between asset ownership and control of certification mechanisms.
While the PRA noted that as of now, the risks associated with permissionless blockchains “cannot be adequately mitigated,” it acknowledged that this classification is still under review. The directive comes as a growing number of global companies increase their investments in crypto-assets, particularly Bitcoin.
For example, on November 29, Hong Kong-based Boyaa Interactive International converted nearly $50 million worth of ether into bitcoin. A day earlier, Metaplanet announced plans to raise more than $62 million to purchase additional bitcoins for its vault, which already holds 1,142 bitcoins worth more than $114 million.
