At the Intersection of Technology, Law, and Business
August 16, 2018 - European Union, Fintech, Telecommunications

UK PRA's 'Dear CEO' Letter on Exposure to Crypto-Assets

UK Regulations: Urgent Action Required from Loan-Based Crowdfunding Platforms

On 28 June 2018, the United Kingdom Prudential Regulation Authority (PRA) published a letter to the CEOs of banks, insurance companies and designated investment firms to communicate the PRA’s expectations regarding firms’ exposure to crypto-assets. In particular, the letter flagged the risks associated with crypto-assets and each firm’s responsibility to comply with the PRA’s Fundamental Rules 3, 5 and 7.

The letter highlighted several risk mitigation strategies and systems that the PRA considers necessary to protect against exposure to crypto-assets. The PRA also outlined their expectations with regard to classifications of crypto-assets and reminded firms to continue to update the PRA of any planned crypto-asset exposure or activity. Discussions around the prudential treatment of crypto-assets are currently ongoing among authorities (both nationally and internationally) and the PRA will communicate any supervisory or policy updates in due course.