According to remarks made by the Bank of England's Financial Policy Committee on Thursday, the central bank is working on drafting a regulatory framework for crypto assets.
The Bank of England emphasizes the importance of effective public policy frameworks for crypto assets.
The Bank of England (BOE) announced to the press on Thursday that it is developing a regulatory framework for digital currencies. The Financial Policy Committee (FPC) of the Bank of England issued the statements, and the bank addressed sanctions related to the continuing Russia-Ukraine conflict. Financial regulators and bureaucrats throughout the globe have recently expressed worry that Russia may use crypto assets to circumvent economic sanctions.
"While crypto assets are unlikely to provide a feasible way to circumvent sanctions on a large scale at this time," the BOE said in a press release on Thursday, "the possibility of such behavior underscores the importance of ensuring that innovation in crypto assets is accompanied by effective public policy frameworks to... maintain broader trust and integrity in the financial system."
Crypto Assets Could 'Present a Number of Financial Stability Risks,' according to the Bank of England. Stablecoins are causing concern at the central bank.
For a long time, members of the BOE have been critical of the bitcoin economy. Andrew Bailey, the governor of the Bank of England, expressed alarm in mid-November last year about El Salvador's decision to make bitcoin legal money. In December, Sir Jon Cunliffe, the Bank of England's deputy governor for financial stability, predicted that crypto asset values might fall to zero.
Financial stability is mentioned in the FPC report released on Thursday. "The FPC continues to evaluate that direct risks to the stability of the UK financial system from crypto assets are presently limited, reflecting their modest scale and interconnection with the wider financial system," the FPC said. The FPC went on to say:
Crypto assets, on the other hand, will pose a variety of financial stability risks in the future if the rate of growth observed in recent years continues, and if these assets become increasingly integrated with the larger financial system.
Politicians throughout the globe have been debating, proposing, and even enacting legislation to examine and regulate digital currencies since the commencement of the Russia-Ukraine war. According to statements made during the FPC meeting on Thursday, the BOE wants crypto assets to be regulated similarly to other financial assets.
The FPC discussed stablecoins, and how a significant one without a strong deposit guarantee may represent a threat to the financial system, in addition to drawing a regulatory framework for crypto assets. "The FPC believes that a systemic stablecoin secured by a commercial bank deposit would pose unfavorable financial stability risks," the committee said.
Source: bitcoin.com
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