The Bank of England Prudential Regulation Authority (PRA) is stepping up its efforts to manage risks linked to cryptocurrencies, ask companies to report their involvement in cryptocurrencies by March 24, 2025.
The PRA explained in a statement on December 12 that companies must share details about your current crypto holdings and plans and how they apply the Basel framework for risk management.
Launched in 2022, the Basel framework sets global guidelines on how banks should properly manage risks when it comes to digital assets.
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One The main area of ​​focus is permissionless blockchains, the technology behind many cryptocurrencies. While these systems offer several opportunities, they also carry risks, such as settlement problems or unclear asset ownership.
The PRA has also raised concerns about stablecoins and unbacked tokens that do not meet regulatory standards. These may face stricter rules under the Basel framework, particularly if they are considered too risky.
Companies are asked to Describe not only your current cryptocurrency-related activities, but also your plans until September 2029.. The PRA has flagged these as priority issues and noted that the risks associated with permissionless blockchains remain a challenge.
As part of the process, the PRA has divided crypto assets into four categories based on the Basel framework.
He The first two groups cover traditional tokenized assets and reserve-backed stablecoins.which are considered relatively lower risk. He Two other groups deal with riskier assets, such as unbacked cryptocurrencies.that require companies to hold more capital as a safety net.
By collecting this information, the PRA and the Bank of England hope sharpen your approach to regulating cryptocurrencies.
As the Bank of England tightens its grip on cryptocurrency regulation, other authorities around the world are also taking action. In Hong Kong, a warning highlights the risks cryptocurrency companies face when they misuse banking services. What legal trouble could they be getting into? Read the full story.
Having completed a master’s degree in Economics, Politics and Cultures of the East Asian region, Aaron has written scientific articles analyzing the differences between Western and collective forms of capitalism in the post-World War II era.
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