The Bank of England’s Prudential Regulation Authority (PRA) has requested firms to disclose their current and planned exposures to crypto assets, including tokenized assets and stablecoins. Such information will help in policy making in prudential treatment of such assets.
In a recent statement, the PRA said it is asking firms to respond by the deadline of March 24, 2025. It asks about disclosures of crypto asset exposures, the application of the Basel framework (an international standard for regulating crypto assets) as well as about future activities.
PRA Targets Crypto Risks and Regulation
Only entities with crypto assets exposures are to respond, clarified the PRA. They instruct firms to fill in, as applicable, sections of the data template provided, with no obligation for ‘nil return’ from firms that did not in fact have exposure.
It’s an initiative that will study whether or not firms are managing risk around tokenized assets and stablecoins (which often play a part in crypto related activities). It comes after the Bank for International Settlements (BIS) teamed up in July 2023 with the Bank of England on ‘Project Pyx Trial,’ a pilot to trace stablecoin reserves and obtain real-time feedback on what assets back them up.
The data collected from the present request will guide regulatory decisions and form baseline criteria for observation of the crypto sector growth.
However, the PRA made clear that the disclosures would inform adjustments to prudential frameworks on crypto assets risk management. If this sounds familiar, it’s because it’s consistent with the global standards outlined by the Basel framework for safe mixing of crypto assets into financial systems.
The fact that the move reflects the Bank of England’s broader sustained policy of trying to balance innovation in financial technology with regulatory safeguards to ensure stability amid greater adoption of digital assets only underlines the point.
