PRA says it is committed to keeping pace with the risks posed by the growth of crypto assets, and it has increased its budget by $31 million in preparation.
Prudential Regulation Authority (PRA), the Bank of England’s regulatory arm has increased its budget for the coming fiscal year by $31.6 million (£24.3 million), citing increased costs as a result of its growing responsibilities and preparations for “emerging risks in the financial system.”
According to PRA’s most recent business plan, released on Wednesday, April 20, its budget for the fiscal year 2022/23 is £320.9 million ($418 million), an 8.2 percent increase over last year.
According to PRA Chief Executive Sam Woods, the PRA’s plan for the coming year is as follows:
“Committed to keeping pace with innovation and emerging risks, including the ongoing digitalization of financial services and the growth of crypto assets.”
According to the PRA, the UK’s exit from the European Union, as well as “proactively preparing” for what it sees as risks to the country’s financial system, is driving up operational costs. In addition, the regulator will hire 100 supervisory risk specialists.
In its business plan for the coming year, the PRA states that it will monitor the risks associated with firms’ exposure to or increased levels of business with cryptocurrencies, adding:
“The PRA will also ask firms to report their crypto-asset exposures, treatments, and future investment plans, and will engage with international partners, including at the Basel Committee on Banking Supervision, to establish a common, international framework for the treatment of crypto-asset exposures.”
The regulator stated that it will keep working on creating a regulatory framework for “innovations such as stablecoins.” The UK Economic and Finance Ministry announced earlier this month that it will amend regulations to include stablecoins as an accepted form of payment.
In March, Woods sent a letter to the CEOs of banks and other designated investment firms about their exposure to crypto-assets, reminding them of the regulators’ expectation that they follow existing policies and regulations in light of their growing interest in the space.
In the letter, he referred to a slew of reports issued that month by UK financial regulators discussing the risks to the country’s financial stability posed by cryptocurrencies and decentralized finance (DeFi).
