Regulatory Alerts2024-08-15
Proposed Amendments to Prudential Investment, Insurance Intermediation and Banking Rules
The regulator proposes amendments to the Prudential Investment, Insurance Intermediation and Banking Rules to define terms for Fiat-Referenced Tokens and establish specific capital requirements for Category 3C Authorised Persons. The changes set a base capital requirement of US$2 million for entities issuing Fiat-Referenced Tokens, while adjusting thresholds for those managing collective investment funds based on their retail availability. Additionally, the document updates the calculation methodology for Expenditure Based Capital Minimums, specifying distinct time periods and fractions of annual audited expenditure depending on the nature of the regulated activities and assets held.
Appendix 2 Prudential – Investment, Insurance Intermediation and Banking Rules (PRU) *In this document underlining indicates new text and striking through indicates deleted text.
Appendix 2 1 … 1.2 Glossary 1.2.1 The following terms and abbreviations bear the following meanings for the purpose of these Rules. Fiat-Referenced Token Has the meaning given in section 258 of FSMR. Stored Value Has the meaning given in section 258 of FSMR. Stored Value Provider Has the meaning given in section 258 of FSMR. … Category 3C 1.3.5 An Authorised Person is in Category 3C if: (a) its Financial Services Permission authorises it to carry on one or more of the Regulated Activities of: (i) Managing Assets; (ii) Managing a Collective Investment Fund; (iii) Providing Custody (where it does so other than for a Fund); (iv) Managing a Profit Sharing Investment Account which is a PSIAr; (v) Providing Trust Services (where it is acting as trustee in respect of at least one express trust); or (vi) Providing Money Services; or (vii) Issuing a Fiat-Referenced Token; and … PART 3– Calculating Capital Requirements … 3.3.2 The table below sets out the Base Capital Requirement for each Category of Authorised Persons. Category Base Capital Requirement (US $) 3C 250,000, except where an Authorised Person has a Financial Services Permission:
Appendix 2 2 Category Base Capital Requirement (US $) a) only to carry out the Regulated Activity of Managing a Collective Investment Fund, in which case the Base Capital Requirement is the higher of: a) i) 150,000 if the Authorised Person manages a Public Fund or any other type of fund that is available to retail customers; or b) ii) 50,000 otherwise; or b) carrying out the Regulated Activity of Issuing a FiatReferenced Token, in which case it is 2 million. … 3.7.1 An Authorised Person, other than one that has a Financial Services Permission to carry out the Regulated Activity of Providing Third Party Services, must calculate its Expenditure Based Capital Minimum as: (a) in the case of an Authorised Person in Category 3C which has issued a FiatReferenced Token, one year; (b) (a) in the case of an Authorised Person which holds Client Assets or Relevant Money or Insurance Money, 18/52nds; (c) (b) in the case of an Authorised Person in Category 3B or 3C which does not hold Client Assets or Relevant Money or Insurance Money, 13/52nds; or (d) (c) in the case of an Authorised Person in Category 4, which does not hold Insurance Money, 6/52nds; of the Annual Audited Expenditure, calculated in accordance with Rule 3.7.2. …