The UK’s Prudential Regulatory Authority (PRA) has announced plans to propose a set of rules for the issuance and holding of digital assets. The decision comes as the use of digital assets continues to grow and evolve globally, and the PRA aims to ensure that banks and other financial institutions operating in the UK can do so safely.

The proposal will be developed in accordance with the rules of Basel III, a global regulatory framework for banking institutions, as well as the Financial Services and Markets (FSM) bill currently under consideration by the UK Parliament. This ensures that the UK regulatory framework is aligned with international standards and comprehensive in its approach to managing digital assets.

Vicky Saporta, chief executive of the Bank of England’s Prudential Policy Directorate, made the announcement in a speech at the bank on February 27. Saporta emphasized that the goal of the PRA is to develop a regulatory framework that is proportional to the risks associated with digital assets while remaining flexible enough to adapt to the rapidly changing market.

The proposed rules are expected to address a variety of issues related to digital assets, including custody, governance, risk management, and disclosure requirements. The PRA’s approach will be based on ongoing discussions with industry stakeholders and other regulatory bodies, as well as best practices observed in other jurisdictions.

This move by the PRA represents a significant step forward in the regulation of digital assets in the UK. While digital assets have grown in popularity in recent years, there has been little regulatory oversight, raising concerns about investor protection and financial stability. The proposed rules will help address these concerns and provide greater clarity and certainty to financial institutions operating in the UK.

In addition to the proposed PRA rules, the UK government has been taking steps to improve its regulatory framework for digital assets. He Financial Conduct Authority (FCA), the UK financial regulator, has put in place a registration scheme for cryptocurrency companies operating in the country and is considering further measures to enhance investor protection and market integrity.

Overall, the UK’s approach to regulating digital assets reflects a broader global trend towards increased regulatory oversight. As digital assets continue to evolve and become more common, regulatory frameworks will likely continue to evolve as well, with the goal of promoting investor protection and financial stability while supporting innovation and growth in the sector. .