U.K.‘s PRA Wants to Raise $419M for Stronger Asset Framework

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U.K.’s Pru­den­tial Reg­u­la­tion Author­i­ty (PRA) is look­ing to raise funds to increase cryp­to scruti­ny and com­bat oth­er finan­cial risks, accord­ing to recent reports.

The bank­ing reg­u­la­tor will report­ed­ly uti­lize com­mer­cial insti­tu­tions under PRA to raise around $419 mil­lion through Feb­ru­ary 2023. The funds are expect­ed to come from an increased levy on lenders and insurers. 

With the $419 mil­lion, part of the funds will be allo­cat­ed towards the hir­ing of addi­tion­al staff and ensure com­pli­ance through­out the cryp­to market.

“In order to deliv­er an expand­ed role as a rule mak­er and an increased focus on oper­a­tional resilience, we will need to increase our resources this year with a bud­get that will allow us to employ around 100 more staff than last year’s bud­get,” said PRA head Sam Woods.

As the agency looks to imple­ment a dig­i­tal asset frame­work in line with glob­al stan­dards, it will also request firms to report their “cryp­to asset expo­sures, treat­ments, and future invest­ment plans.” The PRA also revealed that it is work­ing on devel­op­ing a reg­u­la­to­ry frame­work that har­ness­es cryp­to-linked inno­va­tions, such as stablecoins. 

FCA and BOE

The U.K.’s Finan­cial Con­duct Author­i­ty (FCA) recent­ly appoint­ed Vic­to­ria McLough­lin as inter­im head for its dig­i­tal assets ver­ti­cal, while the reg­u­la­to­ry watch­dog con­tin­ues to work under a tem­po­rary licens­ing regime with 12 select­ed firms. It has already grant­ed full licens­ing approval to 34 firms to legal­ly oper­ate their busi­ness­es in the country.

Back in April, the U.K. gov­ern­ment had made a series of announce­ments to turn the coun­try into a ‘glob­al cryp­to asset tech­nol­o­gy hub.’ The gov­ern­ment also pushed for sta­ble­coin recog­ni­tion as a valid form of pay­ment, despite risk con­cerns raised by the Bank of Eng­land (BOE) sur­round­ing illic­it crim­i­nal activities. 

BOE Gov­er­nor Andrew Bai­ley had com­ment­ed at a con­fer­ence that cryp­to is the new “front line” of crim­i­nal scams. “It prob­a­bly isn’t a finan­cial sta­bil­i­ty risk today, but it has all the mak­ings of some­thing that could become one,” he said. 

While the BOE has repeat­ed­ly stat­ed that there’s an urgent need to reg­u­late the vir­tu­al asset space, the Finan­cial Pol­i­cy Com­mit­tee has sim­i­lar­ly empha­sized the need for “[e]nhanced reg­u­la­to­ry and law enforce­ment frame­works, both domes­ti­cal­ly and at a glob­al lev­el,” which will help influ­ence devel­op­ment through­out these rapid­ly grow­ing markets. 

What does a budget increase mean?

Con­se­quent­ly, PRA’s almost 8% bud­get increase this year means more over­sight prepa­ra­tions for the new vir­tu­al sector.

Wood added that the agency needs to include “the ongo­ing dig­i­tal­iza­tion of finan­cial ser­vices, the growth of cryp­to assets, and the increas­ing use of arti­fi­cial intel­li­gence and machine learn­ing, and devel­op­ments in fintech.”

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