The Bank of England Prudential Regulatory Authority will facilitate international economic growth under the Financial Services and Markets bill now in Parliament.
The United Kingdom’s 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 told in a speech at the bank on 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.
The FSM bill, which had its other reading 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, “ PRA rule-making can deliver three things harness the UK’s strengths as a global financial center, maintain trust in the UK as a place to do business, and tailor regulations to UK circumstances. ” She added:
“We will also be proposing rules about issuing and holding digital assets.”
The BOE and PRA are working with six other agencies to create a “ regulatory grid setting out our plans in one place, ” Saporta said. That new framework will replace the “ labyrinth ” of regulations currently in force, numerous of which are European Union (EU) rules. The U.K. withdrew from the EU in 2020.
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The PRA “ will be consulting on an implementation ” of the Basel 3.1 standards once they're finalized, Saporta said. Those standards would call for banks to limit their exposure to cryptocurrencies to 1% of their capital, with a, 250 threat premium. The EU is considering such legislation. Saporta said:
“I 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.”
In addition, the FSM would extend current BOE regulations for payment systems and e-money to stablecoins. After consultations, the PRA intends that “new norms for PRA-regulated firms will be coherent with rules for other sectors,” Saporta said.
(DEREK ANDERSEN, Cointelegraph, 2023)