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ARTICLE · 25 JULY 2018

UK Prudential Regulator Sets Out Expectations On Firms' Exposures To Crypto-Assets

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On June 28, 2018, the U.K. PRA published a "Dear CEO" letter, addressed to the Chief Executive Officers of banks, insurance companies and designated investment firms.

United KingdomTechnology
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On June 28, 2018, the U.K. PRA published a "Dear CEO" letter, addressed to the Chief Executive Officers of banks, insurance companies and designated investment firms. The purpose of the letter is to remind firms of their relevant obligations under the PRA rules and to communicate the PRA's expectations regarding firms' exposures to crypto-assets.

Crypto-assets have exhibited high price volatility and relative illiquidity and may also be vulnerable to fraud and manipulation, which raises concerns about potential misconduct and poses issues for market integrity. The PRA's letter does not define crypto-assets, but the FCA uses this term to refer to any publicly available electronic medium of exchange that features a distributed ledger and a decentralized system for exchange. The FCA recently published a "Dear CEO" letter outlining best practice for firms in handling the financial crime risks that crypto-assets can pose.

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