Bank of England’s Deputy Governor and Prudential Regulation CEO Sam Woods issued a warning letter to CEOs of Banks and Financial Institutions regarding the potential risks of crypto assets.
Woods stated in the letter that while the watchdog recognizes the potential benefits of the distributed ledger technology to the financial system, attached risks must be acknowledged and anticipated. For which Woods adds: ”These risks are relevant to both the Financial Conduct Authority’s (FCA) and the PRA’s statutory objectives”
Woods includes a reference to the FCA’s letter issued on June 11 for further details on firms’ obligations as relates to financial crime. FCA’s letter has elaborated how banks should handle financial crime risks posed by cryptocurrencies.
Woods’ Letter also warns the institutions that they are responsible by PRA’s Fundamental Rules to cooperate with regulators and have a risk management plan ready for implementation. The document also outlined in detail the basic guidelines for managing crypto asset risks and suggesting that the guidelines could be updated in the near future as talks with foreign watchdogs are on the way.
“Discussions are ongoing, including amongst authorities internationally, on the prudential treatment of crypto-assets.”- Woods says.
By Nadya Astam