While “Not an Issue Yet,” BoE Deputy Governor Sees Growing “Appetite” for Crypto Among Both Retail and Institutions
While not wanting to stop firms from doing things that make commercial sense, Sam Woods calls for a “very conservative view” on capital measures.
The Bank of England Deputy Governor doesn't want the banks to have big exposure to crypto-assets not backed by sufficient capital, and for that, if they would have to front-run global rules, he would.
Sam Woods said on Thursday that Britain's banks at the point “don’t have material exposures to crypto” but added that there is certainly “an investor appetite and not just retail, also institutional investor appetite to have a little bit of this stuff.”
He further noted that some of the banks have announced their plans to provide ancillary services “that may be OK but as that develops and if it develops into something big, we are going to need to make sure the capital treatment is pretty robust,” Woods told Reuters.
The Basel Committee on Banking Supervision (BIS), which is a global banking supervisory authority, has already laid down capital requirements for banks that hold crypto assets. The committee has proposed punitive charges for not meeting them that lenders said would make their involvement in the cryptocurrency sector prohibitive.
According to Woods, Basel's proposals were “quite sensible,” and that the regulatory community was starting to get a better grip on the cryptocurrency sector.
Still, it can take years to adopt norms that would need to be implemented by members like the European Union, the US, and Britain.
“We would not want to stop firms doing things that make commercial sense, but we would take a very conservative view on capital treatment, and if necessary, we would therefore front run, maybe not exactly in the same way, but we would put some capital measures in place,” Woods said. “It’s not an issue yet.”