Bank of England to require detailed reporting on crypto assets by 2025
- Bank of England requires data on crypto exposure by 2025.
- Permissionless blockchains raise significant regulatory concerns.
- PRA seeks alignment with the Basel framework for financial stability.
The Bank of England's Prudential Regulation Authority (PRA) has set a milestone significant for financial sector companies in the United Kingdom. In a statement released on December 12, the regulator determined that firms must report their current and future exposures to crypto assets by March 2025. The measure aims to improve financial stability and guide the development of a regulatory framework for cryptocurrency-related activities.
Companies must also detail the application of the “Basel framework”, a regulatory standard established in 2022 by the Basel Committee on Banking Supervision, which defines capital and risk management requirements for exposures to crypto assets.
The regulator has required firms to submit information on their crypto asset activities, including tokenized assets and stablecoins, as well as assess future plans through 2029. The PRA noted that this information will be crucial to monitor financial stability risks and adjust policies more effectively. “This initiative will help calibrate the prudential treatment of crypto asset exposures and analyze the relative costs and benefits of different policy options,” the statement said.
Companies must also detail how they use permissionless blockchains, which the PRA has identified as areas of risk due to the lack of guarantees in the ownership and control of assets. Despite acknowledging the benefits of these technologies, the regulator says the risks involved cannot yet be fully mitigated, requiring ongoing review.
According to the PRA, permissionless blockchains pose significant challenges, such as settlement failures and lack of authentication guarantees. The authority emphasized that these concerns still need to be addressed to improve security in the sector.
Furthermore, the PRA made it clear that only companies with significant crypto-related activities should respond to the request. Companies without significant exposure do not need to submit data.
The move comes amid a surge in global interest in crypto assets, with major companies buying digital assets as a hedge against inflation. The Bank of England’s move reflects a proactive approach to addressing the challenges of a rapidly growing market.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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