Bank of England to Coordinate with International Regulators for Stricter Crypto Rules
The Bank of England to step up its talks with the international counterparts on a regulatory regime for cryptocurrency next year.
In an interview with The Times, Sarah Breeden, executive director for financial strategy and risk at the central bank, said that as banks begin to offer crypto-assets trading and custody services to clients, global regulators need to design rules to protect the financial system.
BoE has faced challenges in finding data on crypto holdings by institutional investors, and for that, they would require international cooperation to obtain data on institutional crypto holdings, she said.
“The ability to get data on what institutional investors are [holding] is a challenge,” Breeden told The Times, adding, “This is not something the UK can solve all on its own.”
Breeden’s comments align with the tighter rules recommended by the BoE in its financial stability report last week. The central bank aims to manage risks with these rules while encouraging innovation and maintaining trust in the financial system.
The Bank’s financial policy committee that was set up in the wake of the 2008 financial crisis to monitor risks said that there was little direct threat to the stability of the UK financial system from crypto assets through if they continue to be more interconnected with traditional financial services, it is likely to pose a number of risks.
The Bank also plans to introduce crypto regulations in the UK as well. “We don’t have a regulatory framework that’s fit for crypto-coins yet, but what we are doing is rolling our sleeves up and getting ready to build it,” Breeden said.
Last week, the deputy governor, Sir Jon Cunliffe, meanwhile warned against investing in crypto because “their price can vary quite considerably and (bitcoin) could theoretically or practically drop to zero.”
In a separate blog post published last week, Thomas Belsham, a member of the Bank’s stakeholder and media engagement division, said it would be harder to sustain the Bitcoin system over time.
“Simple game theory tells us that a process of backward induction should, really, at some point, induce the smart money to get out. And were that to happen, investors really should be prepared to lose everything. Eventually.”