PRA writes to CEOs on crypto-risks

Sam Woods has written a “Dear CEO” letter to CEOs of all dual-authorised firms on exposures to crypto-assets.

PRA understands firms may already have limited exposure to such assets, and is writing to clarify its expectations of how firms behave, particularly in view of Fundamental Rules 3, 5 and 7. The letter sets out what PRA considers to be appropriate risk strategies and risk management systems, and says that how crypto-asset exposures are classified for prudential purposes will be informed by firms’ risk assessments, although crypto-assets should never be treated as currency.

PRA expects firms to keep in touch with their supervisors about planned exposure or activities relating to crypto-assets.