Bank of England sets out new plans to regulate crypto
The Bank of England's Prudential Regulation Authority (PRA) plans to collaborate with international partners to establish a global standard for bank's crypto-asset exposure.
The PRA oversees the regulation and supervision of around 1,500 financial institutions in the UK, ensuring they maintain sufficient capital and adequate risk controls.
The PRA's Business Plan 2023/24 was published this week and provided details on its approach to towards crypto assets.
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The PRA said it would "work with international partners to establish a common, international standard for the treatment of banks’ crypto-assets exposures".
The Bank of England's (BoE) regulatory body added that it would work with the Basel Committee on Banking Supervision (BCBS) to amend its rules to implement new standards for crypto-assets.
"The PRA will work with international partners, including the BCBS, to assess bank-related developments in cryptoassets markets, the role of banks as stablecoins issuers, custodians of cryptoassets and broader potential channels of interconnections with the cryptoassets ecosystem", the report added.
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In a speech made in February on regulations and international competition, Victoria Saporta, executive director of prudential policy at the BoE, commented on the PRA's objective to boost the UK’s position as a global financial centre.
In the speech, Saporta said that “good regulation is a good foundation for success” and that simplifying the “labyrinth of regulations” will aid the pursuit of innovation.
Saporta noted that the BoE's regulatory body will be proposing new rules for crypto or digital assets.
“I believe our rule-making must incorporate a dynamic digital regulatory agenda that maintains safety without stifling innovation. We published a discussion paper about financial firms’ application of artificial intelligence last year, you can expect to see more from us about this. We will also be proposing rules about issuing and holding digital assets", she added.
Bitcoin was trading flat on Wednesday, ahead of this week's US Federal Reserve meeting on interest rates, with market data signalling investors are poised to sell if macroeconomic conditions worsen.
The price of the world's largest digital asset (BTC-USD) by market capitalisation has dropped from it's psychologically important $30,000 (£23,960) level at the end of April to $28,324, as of the time of writing.
According to data from Coingecko, the global cryptocurrency market cap today is $1.23tn (£0.98tn), an increase of 1.7% in the past 24 hours. However, recent increases in the inflow of bitcoin on to exchanges suggests potential sell-offs are looming.
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