UK to Propose Restrictions on How Banks Can Deal With Crypto Next Year

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The Bank of England plans to introduce new proposals on banks’ exposure to crypto by 2026 to protect financial stability, a key official said Wednesday.

The U.K. is looking to formulate rules that are more on the restrictive side, said David Bailey, the executive director of prudential policy at the Bank of England, in a speech at Risk Live Europe in London.

Bailey suggested the country is likely to encourage banks to have a low exposure to crypto.

“There are also examples where it might be more appropriate to start more towards the restrictive end of the spectrum, while evidence is gathered to see if standards can be relaxed over time,” Bailey said. “The prudential treatment of banks’ exposures to cryptoassets, and specifically those with features associated with heightened price volatility and where investors could lose the entirety of their investment, is an example in this space.”

The nation is seeking to implement the Basel Committee on Banking Supervision’s disclosure framework for banks’ exposure to crypto. This framework must be put in place by the start of 2026 to help nations evaluate risks, the committee said. The Committee also proposed rules that banks should limit exposure to crypto like bitcoin to 1%.

The U.K.’s plans will be “informed” by the standards developed by the Basel Committee, Bailey said.

Nations have been looking to ensure they can maintain financial stability despite crypto volatility by monitoring how interlinked banks are to crypto, especially following the 2023 collapses of Silicon Valley Bank and Silvergate Bank which both had crypto clients.

The U.K.’s prudential crypto rules will come at a time where the country’s other financial regulator — the Financial Conduct Authority — is set to implement a new regime for crypto.

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