The UK banking regulator, the Prudential Regulation Authority (PRA), will propose rules for the issuance and holding of digital assets, said the chief executive of the Bank of England’s Prudential Policy Directorate (BOE), Vicky Saporta, in a speech delivered at the entity on February 27. The rules will be drawn up taking into account Basel III rules and the Financial Services and Markets (FSM) bill that is being considered by Parliament.
The FSM Bill, which had its second reading in the House of Lords in January, would give the PRA the new secondary objective of facilitating the UK’s international economic growth. To this end, Saporta stated that “rulemaking by the PRA can achieve three things: “Build on the UK’s strengths as a global financial centre, maintain confidence in the UK as a place to do business and adapt regulations to UK circumstances.” And added:
“We will also propose rules on the issuance and holding of digital assets.”
The BOE and the PRA are working with six other agencies to create a “regulatory framework that collects our plans in one place”, Saporta said. That new framework will replace the “maze” of regulations currently in place, many of which are European Union (EU) standards. The UK withdrew from the EU in 2020.
The PRA will “consult on the application” of the Basel 3.1 rules once they are finalized, Saporta said. These rules would force banks to limit their exposure to cryptocurrencies to 1% of their capital, with a risk premium of 1,250%. The EU is considering similar legislation. Saporta said:
“I also believe that it is usually easier for internationally active companies to follow a global regulation rather than having to face the expense of adapting to a patchwork of local regulations.”
In addition, the WFTU would extend the current regulations of the BOE on payment systems and electronic money to stablecoins, and after consultations, the PRA intends that “the new rules for companies regulated by the PRA are consistent with the rules for other sectors”, Saporta pointed out.
very irritating @bankofengland speech today from its executive director for prudential policy
Vicky Saporta asserts the BoE’s new secondary objective will spur change.
She talks about changes BoE is implementing.
Never once explains how the former drives the latter
—Chris Giles (@ChrisGiles_) February 27, 2023
Very irritating today’s speech by @bankofengland from their executive director of prudential policy
Vicky Saporta says that the BoE’s new secondary objective will drive the change.
He talks about changes that the BoE is implementing.
Not once does he explain how the former drives the latter
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