BoE Asks UK Firms To Disclose Crypto Activities ‘To Monitor the Financial Stability Implications’ of Assets

Key Takeaways

• The Bank of England’s regulatory arm is collecting crypto data from businesses to help shape its future policy on digital assets.
• Businesses have until March next year to disclose their crypto assets.
• An increasing number of companies are exploring crypto investment.

The Prudential Regulation Authority (PRA), the regulatory arm of the Bank of England (BoE), has called for businesses to disclose their current and future crypto assets.

Companies are being asked to disclose all assets, including stablecoins, by March 24 to help shape their approach to the sector.

A Call To Disclose Crypto

In a statement on Dec. 12, firms were asked to share their crypto asset exposures and how they are currently using the Basel framework.

“This will inform work across the PRA and the BoE on crypto assets by helping us calibrate our prudential treatment of crypto asset exposures, [and] analyze the relative costs and benefits of different policy options,” the PRA said.

The Basel Framework is a guideline for how banks handle crypto asset exposures while maintaining financial stability and mitigating risks.

By collecting data on the current crypto landscape within businesses, it hopes to form a “base from which to monitor the financial stability implications of these assets.”

Permissionless Blockchain Risks

The questionnaire covers a range of crypto-related activities and includes an entire section on permissionless blockchains.

Permissionless blockchains are decentralized networks where anyone can participate without needing prior approval.

The regulator noted several risks with these kinds of blockchains, including the concern that transactions may not always achieve finality—a crucial aspect for ensuring that a transfer is complete and irreversible.

“The Basel prudential framework for holding crypto assets notes that the risks posed by crypto assets that use permissionless blockchains cannot be sufficiently mitigated at present.”

Businesses Exploring Crypto

Big Tech firms are increasingly exploring the possibility of purchasing crypto.

On Friday, Dec. 6, Amazon shareholders published a proposal calling for the conglomerate to consider holding a minimum of 5% of its assets in Bitcoin.

“Though Bitcoin is currently a volatile asset – as Amazon stock has been at times throughout its history – corporations have a responsibility to maximize shareholder value over the long-term as well as the short-term,” the proposal said.

Meanwhile. Microsoft shareholders strongly voted against integrating Bitcoin into its financial books after a proposal filed by the National Center for Public Policy Research called the digital asset an “excellent, if not the best, hedge against inflation.”

The think tank claimed institutional adoption was becoming more “commonplace” through spot Bitcoin ETFs.

Apple is also reportedly planning to purchase $250 million worth of Bitcoin by the end of 2024 as the iPhone maker explores crypto integration into its products.