A Prudential Sourcebook is a collection of rules and guidance issued by a financial regulator that outlines the standards for financial institutions regarding their capital, liquidity, governance, and risk management. These regulations aim to ensure the stability and safety of the financial system and protect consumers. In the context of digital assets, regulators are adapting existing prudential frameworks or developing new ones. Adherence to these standards is mandatory for regulated entities.
Context
Discussions in financial news often refer to the development of prudential sourcebooks specifically tailored for firms dealing with digital assets. Regulators are examining how to apply traditional banking capital requirements and risk management principles to cryptoasset exposures. The objective is to mitigate potential systemic risks and ensure that regulated entities maintain adequate financial strength when engaging with digital assets.
The UK's comprehensive framework mandates full authorization for core crypto activities, requiring firms to architect compliance systems aligned with traditional finance standards.
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