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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