In a letter dated June 28th to CEOs of banks, insurance firms, and designated investment companies, PRA Deputy Governor Sam Woods briefs leaders to act in correspondance to regulatory rules and work with the PRA to reveal any sort of information the financial watchdog would deem as important.
In his letter Woods writes how the cryptocurrency industry has experienced fast growth but is filled with “high price volatility and relative illiquidity.” He claims it is vulnerable to nefarious activities like money laundering and terrorist financing. The letter approves: “crypto-assets should not be considered as currency for prudential purposes,” but discussions are still going on about the prudential treatment of crypto-assets.
The letter points out risk strategies and management systems the PRA considers as appropriate in demands to cryptocurrency. The members and senior leadership demand PRA approved individual to sign off on any sort of risk assessment procedure a firm has “for any planned business direct exposure to crypto-assets and/or entities heavily exposed to crypto-assets.”
The PRA as well recommends businesses to conduct their necessary diligence before exposure to crypto-assets and directs firm leadership to rely on expert voices to assess risk. Finally, the watchdog awaits firms to keep governing contacts abreast about any cryptocurrency-related activity or planned exposure and give a risk estimation about supposed exposure.