The British Central Bank, amid the protracted development of international regulations for the circulation of cryptocurrencies, has requested new powers to protect the country’s financial system.
The Financial Policy Committee of the Bank of England has posted a report stating that the adoption of cryptocurrencies represents a financial risk. The regulator explains that it needs additional powers to regulate the industry, as international norms for the supervision of digital assets may be adopted too late. The committee urged commercial banks to exercise the utmost caution when dealing with what they say is a highly volatile asset.
The Bank of England clarified that with a market capitalization of around 0.4% of global financial assets, cryptocurrencies and decentralized finance (DeFi) currently pose limited risk to financial markets. However, regulators are concerned about the success of blockchain technology, which portends imminent change.
“If the pace of growth seen in recent years continues, and as crypto assets and DeFi become interconnected with the wider financial system, they will pose risks to financial stability. A better regulatory framework is needed both domestically and globally,” the Bank of England said in a report.
The central bank called on other regulators to ensure that markets do not overheat, do not allow financial companies to take unnecessary risks, and stop fraud and abuse in cases where the cryptocurrency reflects classic financial assets such as loans or shares.
Recently, the UK Advertising Standards Authority (ASA) issued notices to more than 50 cryptocurrency companies to ensure that their ads comply with legal requirements. Back in 2021, the Financial Policy Committee (FPC) of the Bank of England warned that the trend of the fast-growing cryptocurrency market merging with the traditional market carries serious risks. In the same year, the Bank of England called for global regulation of cryptocurrencies and acknowledged that the regulator is not in a position to independently collect data on the crypto-currency activities of companies.
Source: Bits
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