Reports suggest that the Bank of England is working on crypto regulations and is forming a new framework. The central bank is planning to bring crypto and stablecoins inside this. The new regulations are expected to be based around two main concerns of the UK. First is Russia using crypto to evade sanctions, and secondly, cryptocurrencies destabilizing the economy of the nation.
The new crypto regulations
The UK’s financial committee understands that crypto isn’t large enough to allow Russia evade sanctions. However, even the possibility of such a thing undermines the importance of ensuring innovating in the crypto space. With the new regulations, it will be easier to maintain better trust and integrity in the financial system.
Then comes the fact that the authorities are concerned about Bitcoin, Ethereum, and other cryptocurrencies affecting the economy of the nation. Since they are unregulated and the government can’t control them, it’s considered risky. While at present many people might argue that crypto isn’t big enough to pose a danger to a large economy like the UK. And if you think so, it’s true.
However, the authorities believe that the rapid pace at which the markets are growing, there could be a problem in the future. So, they are preparing in advance and making sure no economic crisis happens in the UK. They might even bring regulations that treat crypto companies like traditional ones and apply the laws to them that would otherwise only apply to financial services companies.
Regulators will also be keeping an eye on stablecoins and have them in check. The concern around them is if there isn’t any security backing them, it would have serious risks for investors. And if a systemic stablecoin is backed by a deposit in a commercial bank, it would also have undesirable stability risks. So, the Bank of England is also working on regulations that could be out by 2023.
What are your thoughts as the Bank of England is working on crypto regulations? And do you think their concern of crypto destabilizing the economy is justified? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.
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