Key Points
- The Bank of England is planning to enforce new regulations regarding banks’ exposure to cryptocurrency by 2026 to enhance financial stability.
- David Bailey, the Executive Director of Prudential Policy at the Bank of England, emphasizes a more cautious approach to managing banks’ crypto exposure.
Details
The UK is preparing to establish rules that lean more towards restraining banks’ involvement with crypto investments. Bailey noted the necessity of having lower exposure limits for banks related to cryptocurrencies, particularly given the risks involved.
“There are also examples where it might be more appropriate to start more towards the restrictive end of the spectrum, while evidence is gathered to see if standards can be relaxed over time,” said Bailey.
Translation: “Hay también ejemplos donde podría ser más apropiado comenzar más hacia el extremo restrictivo del espectro, mientras se recopila evidencia para ver si se pueden relajar los estándares con el tiempo.”
The UK intends to adopt the Basel Committee’s framework for banks’ crypto exposure disclosures by the beginning of 2026, which aims to assist in risk evaluation. Countries are striving to maintain financial stability in light of the volatility in cryptocurrency markets, particularly after the collapses of notable banks in 2023.
The new prudential crypto regulations will coincide with the Financial Conduct Authority’s ongoing updates regarding crypto governance, reflecting a broader trend towards stringent oversight in the financial sector.
