Yigit Taha OZTURK 
The Prudential Regulation Authority (PRA), the regulatory arm of the Bank of England, has requested firms to disclose their current and future crypto asset exposure by March 2024. This move is aimed at monitoring the impact of crypto assets on financial stability and contributing to the formulation of future policies.
In a statement issued on December 12, the PRA asked companies to share their “current and expected crypto asset exposures” and explain how they are applying the Basel framework to crypto regulations.
“This information will be used to ensure crypto assets are managed prudently, to analyze the costs and benefits of various policy options, and to shape our regulatory efforts,” the statement read.
What is the Basel Framework?
The Basel framework is a regulatory model that defines capital and risk management requirements for banks dealing with crypto assets. Introduced by the Basel Committee on Banking Supervision (BCBS) in December 2022, the framework categorizes crypto assets into three broad risk profiles.
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The PRA is also requesting firms to assess their crypto asset plans up to September 30, 2029. This information will form the foundation for monitoring the effects of crypto assets on financial stability and improving risk management.
The questionnaire includes various issues, such as how firms hold crypto assets and the use of permissionless blockchains. The PRA points out that these blockchains carry “fully unmanaged risks,” citing concerns like lack of payment certainty, transaction error risks, and the absence of a clear link between the owner and control mechanism of a digital asset.
However, it’s noted that the classification of permissionless blockchains continues to be reviewed.
Related Developments
The number of firms involved with crypto assets is growing globally. For example, Boyaa Interactive International, based in Hong Kong, recently announced it converted nearly $50 million worth of Ethereum into Bitcoin. Additionally, the Japanese investment company Metaplanet revealed plans to create a fund to purchase $62 million worth of Bitcoin, adding to its existing holdings of 1,142 Bitcoin.
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