Bank of England’s PRA Requests Crypto Asset Data from Firms
The Prudential Regulation Authority (PRA), part of the Bank of England, has mandated firms to disclose their current and future crypto assets, including tokenized assets and stablecoins.
PRA Requests Comprehensive Crypto Asset Data
The PRA announced this requirement in a statement released on December 12, requesting detailed information about firms' current and expected future exposures to crypto assets. Firms must also explain their application of the crypto regulatory Basel framework.
This data collection aims to inform the PRA's rules and policies, establish fair requirements for firms dealing with crypto, assess different approaches, and understand firms’ activities and intentions regarding crypto assets. The PRA stated:
“This will inform work across the PRA and the Bank of England on cryptoassets by helping us calibrate our prudential treatment of cryptoasset exposures, analyse the relative costs and benefits of different policy options and providing an updated view of firms’ current and intended cryptoasset-related business activities as a base from which to monitor the financial stability implications of these assets.”
The PRA emphasized that firms should provide comprehensive information at the highest consolidated level within the UK. Firms not involved with crypto assets are not required to respond and can complete only relevant sections of the request. The PRA clarified:
“If firms do not have any relevant cryptoasset exposures, businesses or activities, we are not requesting a 'nil return'. It may be the case that some aspects of this template are relevant to particular firms and others not. If that is the case, then we are requesting firms complete only the parts of the template that are relevant to them.”
The questionnaire asks firms to consider plans for crypto assets up to September 30, 2029, with responses due by March 24, 2025.
Permissionless Blockchains Under Review
The questionnaire addresses how firms utilize permissionless blockchains. While these blockchains can hold crypto assets and facilitate their transfer, they present risks such as settlement failures and challenges in verifying ownership and control. The PRA noted that the risks associated with permissionless blockchains require further examination.
Bitcoin has recently reached a new all-time high of $103,000, prompting many organizations to consider acquiring it as a hedge against inflation. This trend has attracted regulatory scrutiny, necessitating updates to existing rules and policies.