Initial coin offering and PRA buffer: Difference between pages

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imported>Doug Williamson
(Expand. Source Bank of England http://www.bankofengland.co.uk/publications/Pages/news/2015/061.aspx)
 
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(ICO).
''Capital adequacy - UK''.


Initial coin offering.
The PRA buffer is an amount of capital which UK-regulated banks are required to hold, determined following stress testing.


A high-risk investment scheme in which investors receive interests in cryptocurrencies.
The amount is determined by the UK regulator, the Prudential Regulation Authority (PRA), following consultation with the regulated bank.




The European Securities and Markets Authority (ESMA) has warned investors that there is a “high risk of losing all of their invested capital as ICOs are very risky and highly speculative investments”.
Any PRA buffer which the regulator may set is additional to Individual Capital Guidance (ICG).


ESMA has also noted that ICOs are vulnerable to the risk of fraud or money laundering.


It points out: “The price of the coin or token is typically extremely volatile and investors may not be able to redeem them for a prolonged period.
The PRA buffer is sometimes known as the 'Pillar 2B' buffer.


“Another key risk stems from the fact that, depending on how they are structured, ICOs may fall outside of the scope of EU laws and regulations, in which case investors cannot benefit from the protection that these laws and regulations provide.”
The PRA buffer replaced the former 'capital planning buffer'.
 
 
Turning to issuers, however, ESMA says that some forms of ICOs may be structured in such ways as to be subject to the same regulations as more standard financial instruments.
 
ESMA notes that it is “likely” that firms behind ICOs with those features are conducting “regulated investment activities” – in which case, “they need to comply with the relevant legislation”.
 
 
Initial coin offerings are sometimes also known as initial public coin offerings (IPCOs).




== See also ==
== See also ==
* [[Cryptocurrency]]
* [[Buffer]]
* [[European Securities and Markets Authority]]
* [[Capital adequacy]]
* [[Financial instrument]]
* [[Idiosyncratic stress]]
 
* [[Individual Capital Guidance]]
 
* [[Pillar 2]]
[http://www.esma.europa.eu/sites/default/files/library/esma50-157-828_ico_statement_firms.pdf ESMA statement November 2017]
* [[Prudential Regulation Authority]]
* [[Reverse stress test]]
* [[Scenario analysis]]
* [[Shock]]
* [[Stress]]

Revision as of 15:06, 29 October 2016

Capital adequacy - UK.

The PRA buffer is an amount of capital which UK-regulated banks are required to hold, determined following stress testing.

The amount is determined by the UK regulator, the Prudential Regulation Authority (PRA), following consultation with the regulated bank.


Any PRA buffer which the regulator may set is additional to Individual Capital Guidance (ICG).


The PRA buffer is sometimes known as the 'Pillar 2B' buffer.

The PRA buffer replaced the former 'capital planning buffer'.


See also

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