The Bank of England has requested a budget expansion of £24m to help the institution keep track of new financial risks, including those related to cryptoassets.
The Prudential Regulation Authority (PRA), an organisation within the central bank that oversees systemic financial risk management, said it will be expanding its workforce of more than 1,300 with 100 additional staff.
The PRA is seeking a budget increase of 9% to £320.9m. The funds will come from a levy increase on lenders and insurers.
PRA head Sam Woods said the organisation needed to keep up with “emerging risks”, which include “the ongoing digitalisation of financial services and the growth of crypto assets, the increasing use of artificial intelligence and machine learning, and developments in fintech”.
Woods said: “In order to deliver an expanded role as a rule maker and an increased focus on operational resilience, we will need to increase our resources this year with a budget that will allow us to employ around 100 more staff than last year’s budget.”
Woods also cited potential difficulties in sourcing candidates for the major workforce expansion.
The Bank of England Governor Andrew Bailey previously told finance firms to be “especially cautious” of cryptocurrencies as regulation has yet to catch up to the technology.
“It probably isn’t a financial stability risk today but it has all the makings of something that could become one,” said Baily.
The Bank of England’s Financial Policy Committee said: “Enhanced regulatory and law enforcement frameworks, both domestically and at a global level, are needed to influence developments in these fast-growing markets.”
The cryptoasset industry has been repeatedly called out for its high levels of risk by financial watchdogs around the world. The UK’s Financial Conduct Authority has cracked down on cryptocurrency trading due to concerns over potential money laundering.
It comes as chancellor Rishi Sunak, along with the economic secretary of the Treasury John Glen, recently outlined the ambition for the UK to become a “global hub” for digital assets.