UK Banking Regulator To Propose Crypto Rules
The Bank of England’s Prudential Regulation Authority (PRA) is proposing new rules for issuing and holding digital assets in the U.K., including stablecoins and other digital settlement assets. The move comes as the country seeks to establish a regulatory approach to crypto that can address potential risks to financial stability.
JUST IN: 🇬🇧 UK banking regulator to implement new rules for holding and issuing #crypto.
— Watcher.Guru (@WatcherGuru) February 27, 2023
The Financial Services and Markets Bill, which is currently under consideration, will grant authorities the power to regulate the sector. The U.K. government is also consulting on its regulatory approach to digital assets, seeking input from stakeholders on how best to manage the risks and benefits of these innovative financial tools.
Concerns for Financial Stability
In a speech on Monday, Vicky Saporta, executive director of prudential policy at the Bank of England, said that the new standards for PRA-regulated firms will be coherent with rules for other sectors. The Basel Committee on Banking Supervision, the global regulator for the banking industry, published a standard on how banks should treat crypto exposure in December, providing guidance for financial institutions around the world.
The move by the PRA is part of a broader trend of regulatory scrutiny around the world as governments seek to address the challenges posed by digital assets. The rise of stablecoins and other cryptocurrencies has raised concerns among regulators about potential risks to financial stability, money laundering, and consumer protection.
Crypto Rules for Banks
In the U.K., the Financial Conduct Authority (FCA) has already taken steps to regulate the crypto sector, including requiring firms to register with the regulator and imposing strict anti-money laundering (AML) and counter-terrorist financing (CTF) measures. The new rules proposed by the PRA would extend these regulatory requirements to PRA-regulated firms, helping to ensure a consistent and coherent approach across the financial services industry.
As the crypto industry continues to grow and evolve, regulators will likely face ongoing challenges in managing the risks and opportunities presented by digital assets. However, the move by the PRA to propose new rules for issuing and holding digital assets is a positive step towards a more stable and secure financial system in the U.K.
