Bank of England asks firms to disclose crypto exposure by March

The Bank of England’s Prudential Regulation Authority (PRA) has mandated that businesses disclose their current and future exposure to cryptocurrencies by March 2025. 

This request aims to monitor the stability of the crypto market and inform future regulatory policies. 

In a statement released on December 12, the PRA emphasised the importance of understanding firms' “current and expected future cryptoasset exposures” and their application of the Basel framework for crypto regulation.

The Basel framework, introduced in December 2022, sets capital and risk management requirements for banks dealing with crypto assets. 

The PRA stated that this information will help calibrate its prudential treatment of crypto exposures and analyze various policy options.

The regulator is particularly interested in how firms utilise permissionless blockchains, acknowledging both the benefits and risks associated with these technologies. 

The PRA noted that while permissionless blockchains can enhance operational capabilities, they also present challenges such as lack of settlement finality and potential settlement failures.

Firms are required to consider their crypto plans up to September 30, 2029, providing a comprehensive view of their engagement with digital assets.

This initiative comes amid a growing interest in cryptocurrencies, with many firms worldwide exploring Bitcoin (CRYPTO:BTC) investments. 

Notably, Tether's (CRYPTO:USDT) recent exit from Europe has shifted market dynamics, prompting firms like Circle and Quantoz to position themselves as compliant alternatives.