The approach of the Bank of England to cryptocurrencies hasn’t been the most favorable, to say the least. Regardless, the central bank sketched out the first regulatory approach to crypto and set forth some deadlines.
Banks Have Until June 3rd to Set Out Plans
According to a recent Reuters report, the Bank of England started sketching the country’s regulatory framework in regards to cryptocurrencies. Outlining that the sector may currently be relatively small but also acknowledging its rapid growth, the institution seems eager to set some ground rules.
BoE also launched a survey to find out the existing exposures of local banks and their future cryptocurrency plans, and the deadline for responses is set for June 3rd.
It appears that the war between Russia and Ukraine has brought up cryptocurrencies as potential means of circumventing sanctions, and regulators have undoubtedly pushed crypto higher on their agenda. BoE, however, seems to acknowledge that this particular concern is for not.
While cryptoassets are unlikely to provide a feasible way to circumvent sanctions at scale, the possibility of such behaviour underscores the importance of ensuring innovation in cryptoassets is accompanied bye ffective public policy frameworks to […] maintain broader trust and integrity in the financial system.
The report also read that BoE will focus on guaranteeing that risks stemming from cryptocurrencies will be under control until the said regulatory framework is brought to life.
What Else?
There’s more. BoE said that it’s expecting stablecoins to be backed by high-quality and liquid assets, including loss-absorbing capital that’s similar to what’s currently being held by banks.
The institution’s Financial Policy Committee (FPC) said that “BoE and the FCA will carry out further work on rules for stablecoins and consult on a regulatory model for systemic stablecoins in 2023.”
The above seems to be in continuation of what the bank’s governor said earlier in March. Speaking on the infamous volatility of cryptocurrencies, Andrew Bailey said:
“It concerns me that a country would choose it as its national currency. What would worry me most of all is, do the citizens of El Salvador understand the nature and volatility of the currency they have.”