A top official revealed that the Bank of England plans to partner with its global counterparts to formulate stiffer regulations for cryptocurrencies. During a recent interview, Sarah Breeden stated that BoE couldn’t regulate the sectors without international cooperation because of digital coins’ cross-sector and cross-border nature.
Breeden highlighted the rapid crypto adoption that made it challenging for authorities to monitor the marketplace. In a Times interview, she said that digital assets saw massive growth, attracting investors from institutional and retail levels. She also noted that United Kingdom banks are exploring exposure to the industry.
Breeden, the central bank’s Financial Stability executive director, said that obtaining data on institutional investors’ crypto holding is challenging. For that reason, the UK will necessitate global cooperation to solve regulatory hurdles.
For now, there are approximately 2.3 million Britons that own crypto, averaging around $396 each, despite 72% not understanding digital currencies two years ago. That equates to about 0.1% of household wealth in the UK, a small ratio. Nevertheless, Bank of England trusts that increased exposure to investors and institutional interest might push the figure high soon. For that reason, Breeden said that regulating the industry is crucial for the bank.
She believes that cryptos threaten financial stability, explaining the knock-on effects that emerge whenever institutional investors hold the virtual assets or someone borrows cash against digital currencies. Breeden said that the knock-on effects materialize as crypto assets near the financial system’s core.
Breeden trusts that the FSB (Financial Stability Board) might spearhead cryptocurrencies’ global regulation. Keep in mind that the IM executive had asked the FSB to create a supervisory framework to design local policies.
The capital industry founded FSB in 2009 after the financial crisis of 2008. The board was to supervise and draw recommendations on the international monetary system. BoE’s last week’s annual reports noted regulating crypto assets as among the critical events to define universal finance next year.
The increased crypto adoption has attracted global regulators. Some authorities want to monitor the industry to protect market participants, while some jurisdictions prefer blanket bans. For now, market players wait for the Indian crypto bill, expected to revolutionize the financial marketplace in India.