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The PRA Has Written to Every UK Bank CEO About Tokenised Assets. This Is What It Said.

  • Writer: Shawn Jhanji
    Shawn Jhanji
  • May 21
  • 3 min read
On 15 May 2026, the Prudential Regulation Authority sent a letter to the chief executives of all UK-regulated banks and designated investment firms setting out how it expects them to treat tokenised assets, stablecoins and other cryptoasset exposures from a prudential perspective. Published jointly by David Bailey, Charlotte Gerken and Rebecca Jackson, three of the PRA's most senior executive directors, the letter is the clearest signal yet that the UK regulator is no longer treating digital asset exposure as a peripheral risk to be noted in passing.

On 15 May 2026, the Prudential Regulation Authority sent a letter to the chief executives of all UK-regulated banks and designated investment firms setting out how it expects them to treat tokenised assets, stablecoins and other cryptoasset exposures from a prudential perspective. Published jointly by David Bailey, Charlotte Gerken and Rebecca Jackson, three of the PRA's most senior executive directors, the letter is the clearest signal yet that the UK regulator is no longer treating digital asset exposure as a peripheral risk to be noted in passing.


For anyone building or advising in the tokenised finance sector, the letter matters in two ways. First, it sets out what UK banks must do if they hold or are considering holding tokenised assets. Second, it signals that the PRA regards the question as live enough to warrant direct communication to every regulated bank CEO in the country.


What the Letter Covers

The letter addresses three categories of exposure: tokenised assets (including tokenised securities and funds), stablecoins, and other cryptoasset holdings. For each, the PRA sets out its expectations on risk identification, capital treatment, liquidity management and governance.


Key themes in the letter include:

  • Capital adequacy. Banks holding tokenised assets must apply appropriate capital charges, and those charges must reflect the specific risk profile of the instrument. The PRA is clear that tokenised versions of traditional assets do not automatically inherit the same regulatory treatment as their non-tokenised equivalents. The underlying technology, custody arrangements and counterparty structures matter.

  • Custody and operational risk. Tokenised assets held in digital wallets, whether by the firm directly or via a third-party custodian, carry operational risk that must be assessed and managed. The letter flags key-management failures, smart contract vulnerabilities and settlement finality as specific concerns.

  • Liquidity risk. Stablecoins in particular require analysis of their redemption mechanisms under stress. The PRA expects banks to model scenarios where stablecoin liquidity is impaired and to hold liquidity buffers accordingly.

  • Governance. Senior management must demonstrate they understand the exposures. The letter makes clear that tokenised asset activity is not something that can be delegated to a digital assets team without appropriate oversight from board and executive level.


The Timing

The PRA letter arrived three days before the FCA and Bank of England published their joint call for input on the future of tokenisation in UK wholesale markets on 18 May. That document set out a positive, forward-looking vision for how tokenised securities, collateral and settlement instruments could transform UK capital markets. The PRA letter is the complementary risk-management signal: the message that this is happening and the rules for how institutions must manage the exposure.


Taken together, they represent a coordinated regulatory stance. The BoE and FCA are encouraging adoption; the PRA is making sure that adoption is safe.


What This Means for the Sector

For tokenisation platforms, custodians and technology firms working with UK-regulated banks, the letter is commercially significant. Banks that have been cautious about tokenised asset exposure now have a clearer framework for how to manage it. Regulatory uncertainty has been one of the main reasons UK banks have moved more slowly than their US and European counterparts on tokenised asset adoption. A PRA-authored framework for prudential treatment removes that uncertainty.


For UK-based founders raising capital from or working with regulated financial institutions, the letter creates a more predictable environment. Banks that have internal capital available for tokenised instrument investments now have a framework for assessing whether and how to deploy it.


The letter is publicly available at the Bank of England website and is addressed to institutions already operating in the UK. For firms not yet regulated by the PRA but anticipating future authorisation, its contents provide a clear signal of what will be expected.


Key Takeaways

  • The PRA published a Dear CEO letter on 15 May 2026 addressed to all UK bank and investment firm CEOs, covering prudential treatment of tokenised assets, stablecoins and cryptoasset exposures

  • Banks must apply appropriate capital charges reflecting the specific risk profile of tokenised instruments — tokenised assets do not automatically inherit traditional asset treatment

  • Custody, liquidity and governance obligations are set out explicitly, with senior management accountability required

  • The letter arrived alongside the FCA and BoE joint tokenisation vision, forming part of a coordinated regulatory push across the UK's financial regulatory architecture

  • For the tokenisation sector, the letter reduces a key source of uncertainty for institutional adoption: UK banks now have a formal framework for how to hold and manage tokenised exposures


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