Businesses holding Bitcoin or other cryptocurrencies on their balance sheets in the United Kingdom will be required to disclose their exposure under a new mandate.
On December 13, the Prudential Regulation Authority (PRA), the regulatory arm of Bank of Englandissued statement Urged businesses operating under its jurisdiction to disclose their existing and future “crypto asset exposures.”
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, provides guidelines on how banks and financial institutions handle cryptocurrencies.
According to the PRA, additional information will help “calibrate” [their] “Prudent Treatment of Crypto Asset Exposures” provides a clear understanding of how companies engage with crypto assets.
This will enable the Bank of England and the PRA to “analyze the relative costs and benefits of different policy options”, ensuring that regulatory measures strike the right balance between promoting innovation and mitigating risks.
Monitoring current and planned crypto-related activities through September 30, 2029 is part of the PRA’s efforts to establish “a basis for monitoring the financial stability implications of these assets.”
According to the questionnaire, the PRA recognizes both the potential benefits and significant risks of crypto assets, particularly those using permissionless blockchains, which face challenges such as settlement failures and weak ownership links.
Businesses will be required to disclose their current and planned crypto asset exposures, including tokenized assets, stablecoins and non-currency assets, by classifying these exposures according to Basel’s risk-based groupings and providing information about the use of permissionless blockchains. -Contains details about supported cryptocurrencies.
Bitcoin’s growing role as a treasury asset
Around the world, businesses are increasingly looking to Bitcoin as a viable asset to retain value, a phenomenon that has accelerated in recent months as the price of BTC has soared above $100,000.
What started 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 such as Anixa Biosciences and Hoth Therapeutics have added Bitcoin to their balance sheets.
On November 26, wellness-focused e-commerce brand Jiva Technologies revealed that it would allotted Invest up to $1 million to add Bitcoin to your treasury, citing its potential as an inflation hedge.
Elsewhere, Japanese companies like Metaplanet and Remix Point The benchmark has already acquired a significant amount of assets.
Chinese-based interactive gaming company Boyaa was one of the biggest names increased Its Bitcoin exposure by swapping some of its Ethereum holdings. Notably, the company added 515 Bitcoins to its existing reserves earlier this month.
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