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The United Kingdom\u2019s bank regulator, the Prudential Regulatory Authority (PRA), will propose rules for issuing and holding digital assets, Bank of England (BOE) executive director of the Prudential Policy Directorate Vicky Saporta said in a speech at the bank Feb. 27. The rules will be developed with consideration for Basel III rules and the Financial Services and Markets (FSM) bill now being considered by the Parliament.\u00a0<\/p>\n
The FSM bill, which had its second reading<\/a> in the House of Lords in January, would give the PRA the new secondary objective of facilitating U.K. international economic growth. To this end, Saporta said, \u201cPRA rule making can deliver three things: harness the UK\u2019s strengths as a global financial centre, maintain trust in the UK as a place to do business, and tailor regulations to UK circumstances.\u201d She added:<\/p>\n \u201cWe will also be proposing rules about issuing and holding digital assets.\u201d <\/p><\/blockquote>\n The BOE and PRA are working with six other agencies to create a \u201cregulatory grid setting out our plans in one place,\u201d Saporta said. That new framework will replace the \u201clabyrinth\u201d of regulations currently in force, many of which are European Union (EU) rules. The U.K. withdrew from the EU in 2020. <\/p>\n Related: Digital bank Revolut launches crypto staking for UK and EEA customers: Report<\/a><\/em><\/strong><\/p>\n The PRA \u201cwill be consulting on an implementation\u201d of the Basel 3.1 standards once they are finalized, Saporta said. Those standards would call for banks to limit their exposure<\/a> to cryptocurrencies to 1% of their capital, with a 1,250% risk premium. The EU is considering similar<\/a> legislation. Saporta said:<\/p>\n \u201cI also believe that it is normally easier for internationally active firms to follow one global rulebook instead of having to meet the expense of adapting to a patchwork of local standards.\u201d<\/p><\/blockquote>\n In addition, the FSM would extend current BOE regulations<\/a> for payment systems and e-money to stablecoins, and after consultations, the PRA intends that \u201cnew standards for PRA-regulated firms will be coherent with rules for other sectors,\u201d Saporta noted. <\/p>\n Very irritating @bankofengland<\/a> speech today from its executive director for prudential policy<\/p>\n Vicky Saporta asserts the BoE’s new secondary objective will spur change. <\/p>\n She talks about changes BoE is implementing. <\/p>\n Never once explains how the former drives the latter<\/p>\n \u2014 Chris Giles (@ChrisGiles_) February 27, 2023<\/a><\/p><\/blockquote>\n \n<\/div>\n\n