The Bank of England is expediting its efforts to formulate and draft a comprehensive framework to oversee cryptocurrency assets regulation in the region. According to a Reuters report, BoE has already set a deadline of June 3rd for the other financial institutions to send reports to the central bank outlining their stance on cryptocurrencies and how they should be regulated in the region.
Bank Of England And Its Upcoming Crypto Asset Regulation Plan
The Bank of England is accelerating efforts to regulate the extensive network of cryptocurrencies in the region. According to Reuters, BoE is actively formulating the country’s first crypto regulatory framework which may assist the nation in overseeing cryptocurrency transactions at large.
The central bank has already begun its preliminary analysis by conducting a survey with other banks to enquire about their crypto plans and their existing exposure to crypto-assets.
The BoE further states that although the crypto sector is small, its rapid growth and ascent could pose risks to the financial stability of the region. Moreover, the cryptocurrency assets have managed to attract enormous scrutiny amidst concerns that they could be used to evade financial sanctions imposed on Russia by the West.
“While crypto-assets are unlikely to provide a feasible way to circumvent sanctions at scale currently, the possibility of such behavior underscores the importance of ensuring innovation in crypto assets is accompanied by effective public policy frameworks to… maintain broader trust and integrity in the financial system,” the BoE’s Financial Policy Committee (FPC) said in a statement.
Moreover, the bank further stated that risks arising from cryptocurrencies will also be covered under the new cryptocurrency regulatory framework. The central bank asserts that crypto-assets at present are largely unregulated and require an organized framework to thrive in the long run.
In addition to drafting the regulatory framework, the BoE is expecting the stablecoins to be backed by high-quality, liquid assets and loss-absorbing capital similar to that held by banks, Reuters reported.
The BoE further added that it will carry out work on drafting essential rules and regulations for stablecoins along with the Financial Conduct Authority. According to FPC, the bank will also “consult on a regulatory model or systemic stablecoins in 2023.”