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

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U.K. Regulator to Raise $419M for Stronger Asset Framework; Will Use Increased Levy on Lenders & Insurers
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According to recent reports, the United Kingdom’s Prudential Regulation Authority (PRA) is looking to raise funds to increase scrutiny of cryptocurrencies and address other financial risks.

According to reports, by February 2023, the banking regulator will use commercial establishments under the PRA to raise around $419 million. The funds are expected to come from increased taxes on lenders and insurers.

With $419 million, part of the funds will be used to recruit more employees and ensure compliance across the crypto market.

“In order to play a greater role as a rule setter and focus more on operational resilience, we need to increase our resources this year, and the budget will allow us to hire about 100 more people than last year’s budget,” said PRA, who leads Sam Woods.

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As the agency looks to implement a digital asset framework that complies with global standards, it will also require companies to report on their “crypto asset risk, treatment and future investment plans.” The PRA also revealed that it is developing a regulatory framework to take advantage of crypto-related innovations such as stablecoins.

FCA and BOE

The UK’s Financial Conduct Authority (FCA) recently appointed Victoria McLoughlin as its interim head of the digital asset vertical, while the regulator continues to work with 12 selected firms under an interim licensing regime. It has granted 34 companies full licenses to operate legally in the country.

Back in April, the UK government made a series of announcements looking to turn the country into a “global crypto-asset technology hub.” Despite risk concerns raised by the Bank of England (BOE) about illegal criminal activity, the government has also pushed to recognize stablecoins as a valid payment method.

Andrew Bailey, president of the BOE, commented at a conference that cryptocurrencies are the new “front line” for criminal scams. “It may not be the financial stability risk of today, but it has all the conditions that could be a risk,” he said.

While the Bank of England has repeatedly stated that there is an urgent need to regulate the virtual asset space, the Financial Policy Committee similarly stressed that “[e]Strengthening regulatory and enforcement frameworks at both the domestic and global levels” will help influence the development of these fast-growing markets.

What does a budget increase mean?

So this year’s nearly 8% budget increase for the PRA means more oversight preparations for the new virtual division.

Wood added that the agency needs to include “the continued digitization of financial services, the growth of cryptoassets, the increasing use of artificial intelligence and machine learning, and the development of fintech.”

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