Businesses in the United Kingdom holding Bitcoin or other cryptocurrencies on their balance sheets will be required to disclose their exposure according to a new mandate.
On December 13, the Prudential Regulation Authority (PRA), the regulatory arm of the Bank of England, issued a statement urging businesses operating under its jurisdiction to disclose their existing and future “crypto asset exposure.”
Additionally, businesses must also detail how they are adopting and implementing the “Basel framework for the prudential treatment of crypto assets.”
The Basel framework is a set of international standards developed by the Basel Committee on Banking Supervision, a global financial regulator. The prudential treatment of crypto assets framework, introduced in late 2022, offers guidelines on how banks and financial institutions handle cryptocurrencies.
According to the PRA, the additional information will help “calibrate [their] prudential treatment of crypto asset exposures” by offering a clearer understanding of how firms engage with crypto assets.
This will enable the Bank of England and the PRA to “analyse the relative costs and benefits of different policy options,” ensuring that regulatory measures strike the right balance between fostering innovation and mitigating risks.
Monitoring current and planned crypto-related activities up to September 30, 2029, is part of the PRA’s efforts to establish a “base from which to monitor the financial stability implications of these assets.”
Per the questionnaire, the PRA recognizes both the potential benefits and significant risks of crypto assets, particularly those using permissionless blockchains, which pose challenges like settlement failures and weak ownership links.
Businesses will need to disclose their current and planned crypto asset exposures, including details about tokenised assets, stablecoins, and unbacked cryptocurrencies, by classifying these exposures according to Basel’s risk-based groupings and providing information on their use of permissionless blockchains.
Bitcoin’s growing role as a treasury asset
Across the globe, businesses are increasingly viewing Bitcoin as a viable asset to hold value, a phenomenon accelerated in recent months as BTC’s price surpassed $100,000.
What began as a leap of faith taken by United States-based business intelligence firm MicroStrategy has now become a widespread trend.
In recent months, other US-based companies like Anixa Biosciences and Hoth Therapeutics have added Bitcoin to their balance sheets.
On November 26, Jiva Technologies, an e-commerce brand focused on wellness, revealed it would allocate up to $1 million to add Bitcoin to its treasury, citing its potential as an inflation hedge.
Elsewhere, Japanese firms like Metaplanet and Remix Point have already acquired notable amounts of the benchmark asset.
Chinese-based interactive gaming company Boyaa was one of the biggest names that increased its Bitcoin exposure by swapping some of its Ethereum holdings. Notably, the company added 515 Bitcoin to its existing stash earlier this month.
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