Banking regulator the Prudential Regulation Authority (PRA) is proposing new rules on issuing and holding digital assets.
The Bank of England’s (BOE) executive director of prudential policy Victoria Saporta announced the country’s plans to firm up its approach on crypto, stablecoins and digital settlement assets that pose a risk to financial stability.
In a speech on Feb 27, titled ‘The Regulatory Foundations of International Competitiveness and Growth’, Saporta outlined the UK’s Financial Services and Markets bill, declaring that once it becomes law, authorities will have powers to regulate the sector.
“This will require us to act when we can to facilitate the UK economy’s international competitiveness and its growth over the medium to long term, subject to alignment with international standards”, she said.
Both the BOE and PRA will now work alongside six other regulators to “produce a regulatory grid that will be easier to navigate” than the “labyrinth of regulations” currently in force, many of which are European Union (EU) rules that the UK withdrew in 2020.
In December 2022, the Basel Committee on Banking Supervision published its Basel 3.1 standards on the prudential treatment of banks’ exposure to crypto assets.
The PRA will be “consulting on an implementation” of the Basel 3.1 standards once they are finalized.
The standards would require such banks to limit exposure to cryptocurrencies to 1% of their capital, with a 1,250% risk premium, a move the EU is also considering.
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