The Prudential Regulation Authority (PRA), which is responsible for regulating banks in the UK, is planning to propose rules for issuing and holding digital assets, according to a speech made by Vicky Saporta, executive director of prudential policy at the Bank of England.
The move is part of the UK government's efforts to establish a clear regulatory approach for the cryptocurrency industry, including stablecoins and other digital assets that could potentially pose risks to financial stability.
The PRA's proposed standards for regulated firms will be consistent with rules established for other sectors, with the aim of promoting coherence across the industry.
The Basel Committee on Banking Supervision, the global regulator for the banking industry, published a standard in December 2022 on how banks should treat cryptocurrency exposure.
The UK government recently released a consultation document on regulating the cryptocurrency industry and a potential central bank digital currency. With the Financial Services and Markets Bill set to become law soon, authorities will be granted powers to regulate the sector.
The UK's efforts to establish a clear regulatory framework for cryptocurrencies come as other countries around the world, such as China and the United States, are also taking steps to regulate the industry. With the growing popularity of digital assets, regulators are seeking to mitigate potential risks to financial stability while also allowing for innovation and growth in the sector.
Overall, the PRA's proposed rules for issuing and holding digital assets in the UK are a significant step towards establishing a regulatory framework for the cryptocurrency industry in the country. It remains to be seen how the sector will respond to these regulations and what impact they will have on the growth and development of the industry in the UK.