Bank Of England Seeks Crypto Exposure Disclosure From Firms

According to Cointelegraph, the Bank of England's regulatory division, the Prudential Regulation Authority (PRA), has requested that businesses disclose their current and anticipated future exposure to cryptocurrencies by March next year. This initiative aims to monitor financial stability and assist in shaping policy regarding digital assets. In a statement released on December 12, the PRA urged firms to report their "current and expected future crypto asset exposures" and detail their use of the Basel framework for crypto regulation. The Basel framework, introduced by the Basel Committee on Banking Supervision in December 2022, sets capital and risk management requirements for banks' exposure to cryptocurrencies. It categorizes crypto assets into three broad groups based on their risk profiles. The PRA's request is part of a broader effort to gather information on current and planned crypto business activities, which will serve as a foundation for monitoring the financial stability implications of these assets. The regulator has asked firms to consider any future plans involving crypto assets up to September 30, 2029. The questionnaire issued by the PRA highlights several key areas for firms to address, including their application of the Basel framework for exposure, their holdings of crypto assets, and any use of permissionless blockchains. The PRA acknowledges the potential benefits of these new types of ledgers but also warns of risks such as lack of settlement finality, settlement failure, and the absence of a guaranteed link between the intended owner of the asset and the entity controlling the authentication and validation mechanism. The PRA notes that the risks associated with using permissionless blockchains cannot be sufficiently mitigated at present, although this classification remains under review. Meanwhile, a growing number of firms globally are considering or have already invested in Bitcoin, aiming to capitalize on the cryptocurrency's recent milestone of reaching six figures. For instance, on November 29, Boyaa Interactive International, a Hong Kong-based online card and board game company, announced it had adjusted its treasury assets by converting nearly $50 million worth of Ether (ETH) into Bitcoin. Similarly, on November 28, Japanese investment firm Metaplanet revealed plans to raise over $62 million (9.5 billion Japanese yen) to purchase additional Bitcoin for its treasury, which currently holds 1,142 Bitcoin valued at over $114 million.