Bank of England Asks Companies to Disclose Crypto Exposure
The PRA, part of the Bank of England, has requested a comprehensive report from companies outlining their current and future involvement with cryptocurrencies. This report must be submitted by March 2024 and aims to improve monitoring for financial stability and guide effective policies.
Following the December 2022 establishment of the Basel framework by the Basel Committee on Banking Supervision (BCBS), which sets out capital and risk management guidelines for banks’ cryptocurrency exposure, the PRA has categorized crypto assets into three groups based on varying levels of risk.
Through this data collection, the PRA seeks to better understand and evaluate the treatment of these assets and determine potential policy options.
Despite the advantages of permissionless blockchains, such as transparency and decentralization, there are also notable risks involved. This includes potential issues with settlement finality, the possibility for settlement failures, and uncertainty surrounding the ownership of assets.
The PRA currently believes that these risks cannot be adequately mitigated, but this assessment is still being reviewed.
