On 18 May 2026, the Prudential Regulatory Authority (PRA) published a Dear CEO letter on the prudential treatment of tokenised assets, stablecoins, and other cryptoasset exposures.

Background

In 2022, the PRA wrote to the CEOs of banks and designated investment firms to remind them of relevant obligations under PRA rules and to communicate the PRA’s expectations regarding firms’ exposures to cryptoassets.

Summary

Reflecting developments in the market, this Dear CEO letter provides an update on the PRA’s expectations for managing the prudential risks from cryptoasset exposures, replacing previous expectations outlined in the 2022 letter. The PRA also note that it should be read alongside the PRA’s Dear CEO letter on deposit-takers’ innovations in deposits, e-money, and stablecoins, which was published at the same time.

The PRA summarise the key areas in which the PRA’s expectations set out in this letter (the 2026 letter) reaffirm, update, or clarify, those set out in the 2022 Dear CEO letter (the 2022 letter) on cryptoasset exposures, including:

  • Strong risk controls: The 2022 letter emphasised firms’ responsibilities under the PRA’s Fundamental Rules 3, 5 and 7 and that crypto risks should be considered fully by the board and the highest levels of executive management. Firms will likely need to adapt existing risk management strategies and risk management systems to suit the different risk profile of many crypto activities. This has been reaffirmed in the 2026 letter, with no change to expectations.
  • Prudential Framework: The 2022 letter set out that firms should consider the full prudential framework when assessing and mitigating risks, including the PRA Fundamental Rules, Pillar 1, the Internal Capital Adequacy Assessment Process, and related Pillar 2 capital considerations. This has been reaffirmed in the 2026 letter, with no change to expectations.
  • Pillar 1: The 2022 letter reminded firms of the requirements for specific risks or activities. In particular, participation in market-making or direct holdings will likely expose firms to market risk and counterparty credit risk. Following the PRA rules on market risk, the letter set out a conservative capital treatment for cryptoassets, reflecting high volatility, limited data and uncertainty, including a 100% capital requirement for the vast majority of cryptoassets, particularly unbacked crypto. The 2026 letter reaffirms the expectation that a 100% capital requirement remains appropriate for unbacked cryptoassets under the market risk framework, while clarifying that there are some forms of cryptoasset exposures that exhibit features that pose less significant risks. Firms should exercise judgement and where PRA rules allow discretion the BCBS standard provides a useful reference point when applying existing prudential requirements.
  • Pillar 2: The 2022 letter set out that firms should assess cryptoasset exposures through ICAAP and Pillar 2, including where Pillar 1 requirements may not fully capture the risks. This has been reaffirmed in the 2026 letter, with no change to expectations.
  • Engagement with supervisors: The 2022 letter set out that the PRA expected firms to discuss the proposed prudential treatment of cryptoasset exposures with their supervisors. This has been reaffirmed in the 2026 letter, particularly where their approach to the existing framework differs materially from the standard.
  • Use of international standards: Discussions were ongoing internationally on the prudential treatment of cryptoassets. This has been updated in the 2026 letter, to recognise publication of the BCBS standard and encourages its use as a reference point where PRA rules allow discretion in their application to cryptoasset exposures and leave scope for interpretation.
  • Tokenised traditional assets: The 2022 letter emphasised conservative treatment for the vast majority of cryptoassets, reflecting high volatility and uncertainty. This has been updated in the 2026 letter, to reflect that tokenised traditional assets would generally receive the same prudential treatment as non-tokenised equivalents where legal rights and underlying risks are comparable, applying a ‘same risk, same regulatory outcome’ approach.
  • Future framework: This wasn’t specific in the 2022 letter. This has been updated in the 2026 letter, to make clear that that expectations remain interim and that the PRA intends to consult on implementation of the BCBS standard following completion of the targeted review, with publication expected no earlier than 2028.